Investment firms have a wide range of technology solutions available to them. Adopting effective tech powers operational efficiency and better decision-making and can result in significant cost reductions over time. One of the most critical applications in your tech stack should be cloud-based investment management software.
Using the cloud to host an integrated and fully configurable investment portfolio management software solution can have many benefits with application to front, middle, and back-office needs. Further, it ensures a strong connection between traders and portfolio managers, brokers, compliance officers, and operations staff in real time. The yield is operational efficiency with the goal of error-free trading.
As companies look to modernize their investment processes and workflows by implementing automation practices powered by AI and machine learning, they will need an investment management system that’s flexible and scalable. They can achieve this by selecting cloud-native solutions.
In this post, learn more about cloud-based investment management software and what “must-haves” should be on every company’s list.
Why the Shift to the Cloud?
Investment firms were once skeptical about the cloud and its capabilities. There was a misconception about migration to the cloud and the ability to be secure as well as keep data private. Other concerns included those surrounding system and data governance, reliability, and controls.
In the modern technology landscape, the cloud is much less “mysterious” and considered highly available, secure, and reliable. This is good news for investment firms, as technology and software deployment requirements aren’t their core competencies. Organizations without a sophisticated internal technology team feel confident with the cloud, with some stating that it’s their preferred security technology deployment method.
Additionally, firms realize the value of the cloud for their tech stack as a competitive advantage. The systems living in the cloud already bring about the opportunity to use AI and machine learning.
What Is Cloud-Based Investment Management Software?
A cloud-based investment management system describes a SaaS platform that consolidates front, middle-, and back-office functionality needs within the cloud. Such a system resides in the cloud (whether public or private), ensuring agility, scalability, and reliability when it comes to the tech back end that powers the system.
End users include traders, portfolio managers, compliance, middle and back-office operations, and often also include client services and marketing professionals. An integrated platform enables automation of manual tasks and real-time analytics. While many products have entered the market to facilitate the need to adopt the cloud, a number of products don’t have the full functionality that firms and different users need. Comparing options means evaluating their features and functionality and how they align with the requirements and workflows of the organization.
Must-Have Features for an Investment Management System in the Cloud
Use this guide for benchmarking valuable features when assessing the best cloud-based investment management software solutions.
Trade Order Management
This functionality is the hub for trade activities in the front office and includes order and execution management (OMS and EMS). It enables firms to leverage automation around trading activities. It provides functionality for portfolio construction, modeling, rebalancing, compliance, and reporting. A complete trade order management system contains all of this functionality
A full trade order management system has a transparent, holistic view of all buy-side trading activities as part of a fully integrated order and execution management system. It bridges the gap between high-level portfolio overviews portfolio managers require with real-time, market data. As a result, it simplifies the trade order management process, while increasing accuracy and efficiency and reducing the risk of trade errors.
As part of a cloud-based investment management software platform, firms can host trade order management in a private or public cloud. Without the cloud aspect, the automation, real-time insights, and ability to deploy AI would be cost-prohibitive and would require sophisticated in-house IT infrastructure that can be prohibitively expensive.
Portfolio Management Software
The next must-have is fully integrated portfolio management software. Ideally, one that integrates portfolio analytics and CRM functions, especially for separately managing client portfolios. The ability to review data requests from clients and consultants on demand ensures that asset managers can provide detailed and personalized information to clients.
This solution should also offer clients access to portfolios. This enables transparency around investments, which builds trust and client satisfaction
Additionally, data aggregation functionality allows data from multiple sources to be accessible and usable to drive better decision-making.
Using this within a cloud-based system from INDATA means the solution is web-based and accessible from anywhere while still upholding the tenets of security and compliance provided by a private cloud deployment model where client data is not commingled
AI-enabled Data Analytics and BI Reporting
The next piece of an effective cloud-based investment management software solution is AI-enabled data analytics and BI reporting. With this platform, firms can aggregate data sources, analyze them with AI-based approaches like natural language (NLP), and create business intelligence reports. Such a solution should offer fully custom reporting, interactive dashboards, real-time alerts, as well as a centralized data repository.
The value of leveraging AI-enabled data analytics and BI reporting is streamlining manual processes and getting insights quicker so they are immediately actionable. These functions are ideal for the cloud, considering the massive amount of information investment firms collect and use, as the cloud effectively takes care of the data storage while providing access the these important tech tools
Automation of Essential Functions
Driving efficiency and productivity in modern investment management is a product of automation. Software for investment management in all the solutions defined above should have these automation capabilities:
- Portfolio/fund accounting
- Data analysis
- Administration
- Reconciliation
- Performance measurement
- Reporting
- Billing
Back-Office Portfolio Accounting & Managed Outsourcing Services
In addition to the software, organizations can partner with providers that integrate investment portfolio accounting functionality as well as back-office managed services. In return, they receive optimized technology powered by services that greatly help with portfolio valuation to provide an Accounting Book or Record (ABOR), as well as a Performance Book of Record (PBOR), while managed outsourcing services take care of things like daily reconciliation, data/IT services, software optimization/implementation, and more.
The Benefits of Using the Cloud for Investment Management Software
When solutions have the features identified above, firms can realize many benefits.
Reduce Costs and Achieve ROI Faster
An on-premises solution is expensive to maintain and upgrade. It also requires skilled IT specialists. For any new updates, it is usually a painful process. Moving to the cloud eliminates all the CAPEX expenses and removes the strain on internal resources. The best model is where the software provider is responsible for the hardware, maintenance, and updates. With this faster implementation, firms also realize ROI from software updates quicker.
Improve Reliability
Cloud-based solutions increase reliability and uptime because it is often difficult to manage this and configure everything correctly internally. Updates create conflicts, and it’s often somewhat overwhelming for small teams. With the cloud, all these responsibilities fall onto the provider, and IT resources aren’t necessary or can be deployed to more strategic activities involving the firm’s own proprietary systems
Strengthen Security
Cloud-based server environments, whether public or private, have different layers of security far beyond what a single operator could create. The systems often have smart cybersecurity defenses. Additionally, misconfigurations, which are easily exploitable, are less likely to occur in cloud environments than in on-prem installations.
Achieve Flexibility
The cloud is agile and can scale up or down as needed. Organizations do not have this option with on-premises solutions. If they need to add more servers and third-party software when it is needed which is increasingly frequent, it’s a long, expensive process. There are also customizations available in cloud deployment with the best providers, especially those that offer private cloud-based solutions
Find the Best Investment Management Software in the Cloud
With these features and their benefits, investment firms can trust and rely on cloud-based investment management software. INDATA has a full suite of integrated solutions that check all the boxes for cloud-based investment management on a front-to-back office basis.
See how it can work for your firm by requesting a demo.
