Convergence of the investment manager’s middle and back offices has been underway for a decade in the form of middle office outsourcing offered by asset servicers (custodians/trust companies) as a value added service to augment their back office capabilities. That service model promised to reduce the investment manager’s operating cost and enable them to focus on their core competencies while the asset servicer leveraged their own infrastructure and capacity. This proposition has delivered on its promise, but there is yet more value to be realized by extending the levers of an enhanced middle office into the front office, thereby empowering dynamic real time interaction. This convergence will enable product developers to bring sophisticated new investment products to market with agility, and portfolio managers to nimbly make tactical and strategic adjustments to the complex portfolios they are designing and managing.
These capabilities will provide competitive differentiation and yield top-line value for innovative firms, enabling them to acquire new clients, grow revenue and secure market share while achieving yet greater operational efficiency and cost savings.