Each Dynamo University user conference brings to light new insight, trends, and challenges that our clients face every day. As we continue to reflect on the highlights from a power-packed, content-rich set of two-day sessions, there are some highlights that are certainly worth sharing with a broader audience.
For example, one of our interactive sessions brought together a group of leading alternatives investment Dynamo clients to share their outlook on FinTech strategy. Below is a summary of the important topics they discussed and key takeaways from our insightful conversation.
Overall Tech Strategy
The panelists made it clear: there is never a finish line for tech strategy. There will always be the question of “what’s next?” – but the ability to capitalize on new technology requires a strong foundation. For our panelists, this meant clear priorities, better data management, technology roadmaps, and solid tracking and measurement.
A main priority for everyone was making the most of tools that help them store, access, and leverage data. Alternatives investing has unique needs in this arena because of the sheer volume of data. To be successful, informed decision-making must be driven by careful data analysis. With ever-increasing data sources, our panelists said the ability to manage it and extract deeper insights is key to gaining a competitive edge.
Key takeaway for alternatives investors: Select an investment management platform that will evolve in-sync with technology trends and new capabilities. With making data meaningful a top priority, bring data automation to each step of the acquisition process to extract more information faster and more accurately.
The Core Challenge of ALTS Investing
In ALTS investing, every deal opportunity is unique. Deal teams spend a tremendous amount of time workshopping with clients, investors, and prospects for each opportunity. This lack of standardization, coupled with the flood of information to synthesize, is at the core of one of the biggest challenges facing our panelist investors. As one put it, “The challenge isn’t around the paper – it’s the effort required to pour through thousands of documents and draw out the important details.”
Firms that want to scale recognize that they must pin down and optimize processes to build in operational efficiency. Without that, firms must compensate by continuing to add more human capital, which can add unneeded complexity and significantly raise overhead costs.
Key takeaway for alternatives investors: Efficient processes coupled with intelligent technology are a must for any firm that wants to grow. Cloud-based tech platforms are much more scalable and capable of handling ever-increasing data volumes. Additionally, automated workflows can greatly enhance the speed and efficiency of investing processes while ensuring key tasks aren’t overlooked.
Creating a Single Source of Truth
I always like to say, “everyone wants to share a system,” – that is, until they have to share a system. But, until it happens, there won’t be a single source of truth. DU panelists said their clients today are hungry for data and transparency, and they want information fast. Instead of drowning in staggering amounts of unstructured data, alternative investors must get information out of their inboxes and heads and into a standardized system that organizes and makes sense of it.
Insights can only be as good as the underlying data. Data governance is a high priority, with some DU panelist firms taking on small in-house data governance and reporting teams to assist with data cleaning, validation, reconciliation, and standardization. This lays the right foundation to get clients the data they want in a fast, yet meaningful way.
Key takeaway for alternatives investors: It takes an ongoing concerted effort to grow in data maturity, but the results are well worth it. The ability to generate real-time, flexible reports helps alternative investors capture opportunities more quickly, better manage risk, and meet investor demands for data.
Artificial Intelligence
All DU client panelists indicated they are watching developments in AI closely, with some even assembling internal task forces to evaluate its potential use cases. But, all were proceeding with caution. In an industry that deals in highly sensitive data, every panelist was cognizant of the potential security and data breach risks in the still-emerging field of generative AI.
Panelists could envision future applications for AI that might include AI-generated responses to certain types of client requests and AI-optimized workflows that transform the efficiency of back-office operations. Additionally, they saw great potential for AI in data management and the generation of advanced analytics.
Key takeaway for alternatives investors: Don’t rush to begin using public generative AI tools such as ChatGPT because of security and privacy concerns, but, it’s wise to begin preparing for AI transformation. By establishing tech partnerships today with providers that deeply understand the ALTS industry and have AI in their current and future roadmaps, you’ll have a secure path to make the most of this exciting technology.
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Michelle O’Connell serves as Global Head of Implementations at Dynamo Software. In this role, Michelle leads the global professional services and software implementation teams for Dynamo. Michelle’s focus is on optimizing the design and execution of the software implementation process across Dynamo’s client base, as well as partnering with clients and colleagues to meet success criteria and achieve client business outcomes. Connect with Michelle on LinkedIn.
