Digital alpha technologies inc
- 1. NEW YORK Multi-dimensional technology strategy to create value
- 2. 2 WHAT LEADERS ARE DOING? 02 FOUR DIMENIONS OF LEVERAGE 03 06 EXECUTIVE SUMMARY 01 04 07 LEVERAGE TO CXOS 05 LEVERAGE TO THE TEAMS LEVERAGE TO THE FIRM LEVERAGE TO OPERATIONS
- 3. 3 Executive Summary Increase in business complexity Expansion of legacy systems Impact of market forces Bottlenecks to growth Increase in spend Pressure on business model Why did managers operations and technology costs double in the last 10 years? What are best performers doing? Spent 25% less on overall technology and operations Spent 35% more on discretionary data projects Digitization of Activities Alpha Generating Capabilities + = 2X AUM Growth 1.5X Profit Margins 0.75X O&T Costs How can we help? Digital Alpha Strategic Consulting Solution Development Digital & Data Platforms Digital Alpha
- 4. 4 Increased complexity – of financial markets, investment techniques, products, distribution and regulation Increase in business complexity Manage complexity by expanding and patching legacy platforms Expansion of legacy systems Processes, governance, and skills are not optimized for growth in the digital era and bear higher costs Bottlenecks to growth Outsized growth in operations and technology spending Outsized growth in spend Operations and technology costs for asset managers have grown twice as fast as total expenses in the last 10 years, roughly doubling in amount FOR ASSET MANAGERS ONLY However, best performing managers spent less on operations and technology overall, and out-invested competitors in data and analytics Impacted by trends such as digitization and commoditization, downward pressure on fees, pressures from sustainability, new tech-centric business models, and other investment innovations Impact of market forces Business model faces pressure New technologies promote new business models; disruption and creative destruction are endemic
- 5. 5 The correlation between digital leadership and improved overall performance is no accident FOR ASSET MANAGERS ONLY
- 6. 6 Best performers spend 25% less on overall technology and operations, and 35% more on discretionary data projects FOR ASSET MANAGERS ONLY
- 7. 7 Firms generating digital alpha share three sets of operations and technology characteristics FOR ASSET MANAGERS ONLY Partnership between operations and technology Reduce cost and technical debt, invest in alpha generating capabilities Place for technology at the heart of strategic differentiation 1 2 3
- 8. 8 Firms generating digital alpha describe their digital strategies as creating, and not just enabling, value Partnership between operations and technology Reduce cost and TD, invest in alpha generating capabilities Place for technology at the heart of strategic differentiation Eliminate a traditional and increasingly artificial boundary Combine budgets and talent; develop and execute joint strategies Sponsor major strategic initiatives jointly Reduce cost and technical debt(TD) by: o Streamlining legacy architecture o Eliminating duplicate applications o Sunsetting outdated systems Invest in new generation technical capabilities o e.g., new sources of data, automation, machine learning Appoint CTOs/COOs to the management executive committee Seek new board members who bring expertise in operations and technology Invest in talent development to more effectively leverage digital capabilities Adapt effective operating models o e.g. agile application development and maintenance FOR ASSET MANAGERS ONLY 1 2 3
- 9. 9 Best performers are in the top decile in each of the following three dimensions: Streamlined application landscape : o Focused set of vendors across the value chain o High infrastructure and application stability o Strong cybersecurity protocols Integrated data strategy, actively using algorithms and advanced analytics: o Use Machine learning to improve investment performance o Strengthen product distribution and client relationship management o Optimize operations, or manage talent Focused on reducing cost and improving efficiency through : o Middle office and back office process optimization and automation o Capital allocator and analyst journey redesign Data & Analytics Automation and Workflow Core Architecture FOR ASSET MANAGERS ONLY
- 10. 10 Best performers engage vendors in multiple ways to accelerate growth and improve margins Accelerate Solution Development: Leverage to the Teams Edge with Dynamic Talent Acquisition: Leverage to the Firm Provide Strategic Consulting: Leverage to CXOs Optimize with Managed Services : Leverage to Operations Provide leverage to CXO with technology problem solving to address key pain points that improve business performance; driving revenue, optimizing IT spend, giving speed and flexibility Speed up implementation of solutions with flexible on-demand engagement models and collaborative execution approach with internal teams Help with hiring the right talent to create value by rapid and nimble matching of people and opportunities giving overall positive experience to all the stakeholders. Provide leverage by taking over multi-faceted technology processes and functions to free-up the in-house workforce to focus on higher- value tasks. A 1 1 2 3 4
- 11. 11 Leverage to CXOs : Targeted problem-solving and strategic consulting on-demand (1/2) • Diagnose organizational current technology state • Synthesize issues/concerns from the stakeholders and the study findings • Prioritize and assign economic value to solving each problem Diagnostic Study • Define the scope and objective of the workshop • Lead the brainstorming sessions and solution design • Syndicate design and development activities with the stakeholders Problem Solving Workshops • Identify critical solution components to prove out • Define success criteria for the proof-a-thon • Complete the proof-a-thon and share the findings within 1 - 2 weeks Proof-a-thon 1
- 12. 12 Leverage to CXOs : Targeted problem-solving and strategic consulting on-demand (2/2) • Provide reference architectures for data and artificial intelligence platforms • Update on S/W used in- house, possible simplifications and alternatives • Consult in-person with CTO and/or teams 2-4hrs. per month for problem-solving • Collaborate on strategic roadmaps, presentations, technology offsite Monthly Insights TCO and KTLO Reduction Program Capability Development Program FinTech & AI Due Diligence Architecture Review Services CoE – DevOps, Data and AI Pipelines New Technology and Vendor Evaluation Nearshore Development Team Setup 1
- 13. 13 Leverage to the teams : Accelerate solution development that require Cloud, DevOps, Data and AI engineering skills (1/2) Functional Solutions Develop custom Investment decision workflow Build decision support system with IBOR, analytics and workflow Vendor data normalization, arbitration and optimization Calculate daily P/L and fund/product NAV Build models and system for market, liquidity and counterparty risk Daily reconciliation of ISDA contracts and positions 2 Front Office Middle Office & Risk Back Office Setup self-service data analytics platform for analyst with integrations Detect anomalies in data real-time using machine learning
- 14. 14 Leverage to the teams : Accelerate solution development that require Cloud, DevOps, Data and AI engineering (2/2) Core Architecture Make on-premise applications cloud ready and migrate to cloud Reduce response time with digital operations Build shared services such as Redis, Kafka and ELK clusters Make firmwide data and calculation assets available via micro services Integrate systems to reduce errors and improve efficiency Reduce new functionality time to market with CI/CD automation Data & Analytics Build Data Lake for analyst research and exploratory work Setup self-service data analytics platform for analyst with integrations Build/enhance master data management and market data repos Build enterprise data hub for real-time single source of truth data Build real-time data pipelines to capture changes in underlying data Detect anomalies in data real-time using machine learning 2
- 15. 15 Leverage to the teams : Accelerate solution development with flexible engagement models Leadership >> Recruitment >> Location >> Fees >> Onsite Development Hybrid Development Offshore Development • Onsite senior consultant leads the team with oversight from SME and Architect • Onsite senior consultant leads the team with oversight from SME and Architect • Offshore senior consultant leads the team with oversight from SME and Architect • Team member hiring is based on interview scoring by senior developer, architect, SME, client technical lead and product owner • Team member hiring is based on interview scoring by senior developer, architect, SME, client technical lead and product owner • Team member hiring is based on interview scoring by senior developer, architect, SME, client technical lead and product owner • Onsite : All team members • Visiting & Remote : SME & Architect • Onsite : Lead consultants • Offshore: Remaining team • Visiting & Remote : SME & Architect • Offshore: All team members • Visiting & Remote : SME & Architect • Hourly rates • Hourly rates • Fixed for short term projects <= 4 weeks with sign off on design and development activities • Hourly rates • Fixed for short term projects <= 4 weeks with sign off on design and development activities Well-defined & Independent Dynamic & Not Independent 2
- 16. 16 Leverage to the firm : Dynamic matching of people with domain and/or technology expertise with roles and opportunities Well-defined & Independent Full Stack Developer Python Developer Quantitative Developer Data Engineer DevOps Engineer Cloud Engineer Site Reliability Engineer Data Analyst Full Stack Analytics Developer Backend Engineer Software Development and Engineering Roles ML Engineer More Operations Intensive High Domain Knowledge 3
- 17. 17 Leverage to the firm : Intense pre-screening and client validated training program to hire right & fast Well-defined & Independent Lateral Hire Screening Process Veteran & Young Talent Screening Process Resume/LinkedIn/GitHub Role Specific Coding Exercise & Walkthrough Technical and Domain Phone Interviews Client Resume and Test Scores Review Client Interviews Client Feedback Calibrate Screening Process Client Screening Pre- Screening 1 2 3 4 5 6 Resume/ Projects/Internships/GPA Generic Coding Exercise, Walkthrough & Interviews Client Screening & Selection for Training Program Client Validated Training Program & Capstone Coding Exercise & Walkthrough Client Interviews 4 Weeks Training Program 1 2 3 4 5 6 3
- 18. 18 Leverage to the firm : Structured and transparent hiring approach to achieve positive outcome for all stakeholders • Tailor coding exercises for specific positions • Interviews are conducted by senior technical and domain experts • Systemize hiring blueprints, workflow automation & alerts • Access to client portal with candidate assessment and interview details • Parse and match resumes using AI Structure & Transparency Pre-Screening Custom Hiring Blueprint Workflow Automation Client Portal Client Validated Training Program • Access to more than 40+ universities and colleges in north east • Tailor training and capstone projects to client needs Hiring Platform 3 Consolidate Hiring Efforts • Continue to work with multiple vendors, and yet leverage from centralized pre-screening and hiring platform • Free up team and firm resources from the pre- screening and admin activities
- 19. 19 Appendix
- 20. 20 Our Mission Create value by solving technology problems with a milestone-based delivery model
- 21. 21 Digital Alpha : Only a handful of firms are creating value – digital alpha, through greater investments in data and analytics, and by digitizing their operations and technology functions FOR ASSET MANAGERS ONLY Best performing managers spent less on operations and technology overall, but out-invest competitors in data and analytics
- 22. 22 We strive to create lasting and substantial impact in our engagements Client unmet needs Digital Alpha capabilities Leadership aspirations and ideas Impact OPPORTUNITIES TO SERVE MORE IMPACT = MORE OPPORTUNITIES
Editor's Notes
- #21: Solve problems that add sustainable digital alpha for the asset managers Increase Digital Alpha Problem Solving Accountability and Milestone based delivery model Accelerate Solution Development McKinsey Style Consulting to Tech Bring the best from investment management, consulting and Fintech