The pressure on the MENA funds industry has never been greater. Managers are facing intense competition, battling with higher costs and dealing with greater reporting requirements.
At the end of 2012, the number of funds increased, but the actual assets under management (AUM) have decreased by 7% to just under USD 60 billion, according to Zawya Funds Monitor.
Now more than ever, wealth managers, family offices and independent asset managers need to ascertain whether their operational processes are fulfilling their business needs and those of their clients. However, alongside the need to stay ahead of the game, there is another factor at work.
The increasing use of mobile devices and tablets as business tools are changing irrevocably the idea of business computing. While it is true that professionals in the Middle East are relatively loyal to their laptops (as mentioned in IDG's iPad for Business Survey 2012), their avid use of social media and mobile devices such as tablets continues to grow apace.
Meanwhile, many family offices, wealth managers and independent asset managers in the region continue to run disjointed systems. In several cases these are adequate for the job, but for those firms that want to grow their business and invest in multiple international markets without slowing down the operations process, the need for a powerful accounting engine, global security coverage and multi-currency capabilities is crucial.
Similarly, family offices, whose core functions revolve around advising on investments, monitoring and reporting at various levels (e.g. empire, family, sub-family and individual levels) will need more sophisticated reporting tools.
Facilitating these trends can be straightforward. The advancements in technology mean that firms can use one system through front, middle and back office, as well as offering to clients more complex asset and diversification structures while at the same time managing the key aspects of growing their business. But there are challenges.
Investing in technology is vital
One of the main IT challenges for many wealth managers is operational capacity. Firms that lack scalable architecture will not have the capacity to support asset growth, introduce new reporting methods and keep abreast of costs. However, a system with an integrated platform and scalability will deliver even greater power, flexibility and ease of use.
Hence technological investment at the relevant stage will provide the capacity for growth and diversification without adding staff or straining the system.
Another challenge facing managers is in the change in reporting requirements from the regulators. These new requirements have a direct impact on managers' best practices and their technological needs. For example, regulators may now demand reports at short notice and Shariah-compliant funds should meet IASB or AAOIFI standards.
But proper reporting is not only a way of keeping the regulators at bay. A strong accounting and reporting function is integral to the fund management process and today's portfolio managers need to be able to instantly deliver accurate and timely reports, which are customized to meet the idiosyncrasies of the GCC financial markets and the diverse set of information that clients demand.
Ultimately, it is the responsibility of the operations team to ensure that these tasks are completed efficiently and in a short timeframe. They need to be able to accurately value each fund using advanced search capabilities across portfolios, contacts and activities as well as a fully automated reconciliations process. Clients should be able to view almost instantly, a past report on a particular asset class.
The drive to provide quick response reporting has led to a fundamental shift in client requirements. As well as providing a personal service with real-time information on their assets, clients are now requesting a more interactive relationship with their wealth managers.
Clients want Internet access to systems, which means that they are able to subscribe to funds, make redemptions, check the status of portfolios, access reports, order information online and use online investment tools.
Access to these is not confined to desktop alone, however. There is a growing trend towards using mobile devices and tablets for all aspects of business including making investment decisions.
Both clients and wealth managers are seeing the advantages of work tablet usage through better levels of service as well as lower costs. Despite competition and regulatory pressures, the investment industry in the MENA region is still on course for growth. And as long as the technology infrastructure is in place, wealth managers should be well-placed to benefit.
Hazem Elmalla is regional head for client relationship and support at Advent Software, MENA.
© Zawya 2013
