Outsource Reconciliation to Maximize Operational Alpha
In a market environment rife with investment opportunity, the combination of evolving investor demands, rapid technological advancements and increasing regulation continues to weigh on hedge funds’ profit margins, forcing them to seek new ways to generate returns beyond their performance. With this, a new model of outsourcing non-core processes – like reconciliation – has emerged to help managers maximize their operational alpha while simultaneously allowing them to maintain control and transparency.
By handing off the reconciliation process to service providers, managers can focus their attention on maximizing performance alpha for their clients. Meanwhile, the reconciliation service provider can focus on driving operational alpha by delivering the below advantages:
- Cost Savings: Unlike in-house solution deployment, reconciliation service providers streamline business processes and automate repetitive, labor-intensive tasks. Additionally, these providers invest in advanced and emerging technology – like blockchain, artificial intelligence, and machine learning – to achieve process efficiency and help managers save on the overhead costs of making these investments themselves.
- Audit & Transparency: With a reconciliation service provider, the entire reconciliation process is managed in the cloud with “audit anytime” transparency, making it easy for users to check the status of any transaction at any point in the process.
- Operational Expertise: From handling the reconciliation process and performing similar functions across a wide variety of funds, reconciliation service providers have achieved expertise that cannot be matched by an in-house reconciliation infrastructure. They possess years of experience, operational prowess and service specialization.
- AI/ML Suggestions: Reconciliation service providers’ solutions use advanced artificial intelligence and machine learning technology to consolidate and analyze data and create automated suggestions for break management.
- Service Quality: Outsourcing reconciliation responsibilities to subject matter experts can be an effective way to maintain transparency and service standards. Integrated reconciliation service providers who have stringent hiring standards, exhaustive training regimes and a rich knowledge base can provide maximized value for their clients while also reducing process turnaround time (TAT).
- Security & Less Maintenance: Multi-factor authentication is deployed by these service providers to ensure restrictive, safe and secured access while periodic data backups and cleanups reduce TCO and maintenance efforts.
- Advisory & Consulting: Since reconciliation service providers possess subject matter expertise, managers can turn to them for consulting or advisory services to resolve service-related issues and challenges, including the reconciliation of emerging and complex asset classes or implementing industry best practices.
With outsourcing’s many advantages comes the fear of losing transparency and control. However, smart and efficient reconciliation service providers offer a suite of capabilities as well as UI access that managers can use to visually review actions that have been performed and to request full audits at any time.
IVP Reconciliation-as-a-Service combines the power of an any-to-any reconciliation solution with digital-first managed services to deliver full transparency, scalability and optimized efficiency for asset managers looking to offload the critical work of reconciliation. It leverages integration, automation and flexibility to quickly adapt to rapidly changing workflows and process millions of transactions in minutes.