Investment professionals are always thinking of ways to improve performance and efficiency, as they know they translate directly to increases in revenue. Most of these improvements are a direct result of the digital transformation that is occurring across the capital markets landscape, emphasizing the importance of buy side technology. The impacts that these changes are bringing can be immensely beneficial if they are properly utilized but could prove problematic if overlooked.
3 Key Factors Driving Innovation in Buy Side Technology
Let’s take a look at three key factors that are continuing to drive the evolution of financial technology and helping ensure that investment firms are adequately positioning themselves amidst a shifting status quo.
Lack of Resources
Investment firms are keen to leverage technology growth and emerging ideas for improved efficiency. While they recognize the importance of innovation, most firms either do not have the workforce or the bandwidth to take on new projects; or they don’t have the existing rails in place to support these types of advanced fintech tools.
These challenges make the adoption of new technology both very costly and quite challenging considering the sweeping changes often required from firms to take that next step in innovation. Without the appropriate personnel on-board to design, implement and roll out new solutions and upgrades, the burden becomes exponentially higher, creating the need to innovate tools that improve efficiency and production, without high implementation costs.
Finding a system that is advanced and flexible enough to integrate seamlessly into a firm’s current operations and data is challenging. When the human element is factored in, there is a significant amount of downtime that must be allocated to not only build the tools, but also learn how they’re used to maintain growth and capitalize on opportunities, increasing the need for innovative solutions, such as investment management CRMs with quick implementation times.
Compliance Regulations
The second factor is that MiFID II has led to diminished research coverage for small and mid-cap companies, putting more of the onus on the buy side and corporates for direct communication and creating more responsibility for investment pros to prepare due diligence and publish their own research.
Corporate access meetings previously coordinated by the sell side will fall into the hands of the buy side. As a result, investment firms have both a greater need and appetite for streamlined buy side technology tools to readily fill these gaps. Without a collaborative solution in place to catalog these initiatives and organize the increased responsibilities, there will undoubtedly be missed opportunities.
A Need for Collaboration
Finally, investment firms are actively seeking partners with which to collaborate. By leveraging their relationships across broker, corporate and fintech vendor partners, investment professionals gain a greater capacity of technical expertise and economies of scale to ensure solutions are more future-proof in their design.
By partnering with experienced professionals who understand the intricacies of the capital markets industry, investment firms can respond much quicker to their evolving needs. With the structural landscape of the industry and regulatory factors changing constantly, an agile and nimble approach with expanded market awareness ultimately creates greater scalability as the business grows.
Instead of investing in costly upgrades, it has and will continue to be more prudent for firms to collaborate more frequently and directly. Finding the right partners is going to foster the flexibility of fintech tools, drive the level of innovation across the industry landscape and help ensure that investment firms are addressing technology and structural movements as they unfold.
Software Solutions for Buy Side Firms
At Tier1, we’ve implanted ourselves at the center of this dynamic and through our collaborative approach to technology, we’ll be keen to hear how the needs of these industry participants continue to evolve in the years ahead.
Contact us today to learn more about our buy side technology tools and how they can help improve efficiency and productivity for your firm.