Fear about losing competitive advantage is the impetus behind big data, which mutual fund and ETF managers consistently rank as a top technology trend in the years ahead. The general consensus among managers: "We'll be comparatively less productive and innovative if we don't invest in big data."
Technologies around data analytics, tracking, and reporting are critical to enable fund managers to service their shareowners and advisors effectively while being able to take advantage of the plethora of information that many money management firms already collect for selling, retention, and sales growth, explains Chuck Gallant, managing director at BNY Mellon. Big data is not just about collecting more information. It's about using information more effectively, which comes at the cost of hiring additional staff to handle more complicated analysis. "But fund managers are increasingly making this a priority," says NICSA President Theresa Hamacher.
To learn about other top technology trends for 2014 and the overall pulse of the industry, here's what a handful of industry executives have to say about what they see coming.
"I believe one of the top technology issues for mutual funds in 2014 will be the successful integration of sales reporting into the distribution process. Given the acceleration of firms trading in an omnibus environment, managers are getting less and less information about who is buying their funds. Coordinating trading activity with contact management is becoming increasingly important, particularly for smaller managers."
- Kevin Guerette, director of distribution strategies at Ultimus Fund Solutions
"For mutual fund and ETF managers talking to clients directly, voice recognition technology is getting attention. It allows firms both to personalize service and increase security. This is really another big data application."
- Theresa Hamacher, president of NICSA
"Our mutual fund clients are focused on improving the overall online experience and enhancing shareholder and advisor engagement. Mutual fund companies are expected to follow suit with other financial firms (banking, brokerage, etc.) by having functionality like online bank verification, something we are currently implementing for a number of our clients. In addition, shareholder and advisor expectations are continually evolving based on their retail site and other online interactions, and as an industry we have to be prepared to keep up."
- Brian Melter, managing director at Boston Financial Data Services
"We see skyrocketing demand for customization and bespoke client indexes for use in their investment processes. As clients look for tailor-made indexes to fit their investment needs, there is a focus on technology to help quickly drive the creation of these customized and sophisticated indexes and support their distribution."
- Diana Tidd, head of MSCI's index business in the Americas
MOBILE TECHNOLOGIES AND SOCIAL MEDIA
"Even though the initial hype around using iPads and apps has died down, firms continue to explore how to provide more mobile-friendly websites using responsive design and adaptive content and even more useful apps for wholesalers. More firms are getting engaged in social media; by that I mean they are allowing comments on blogs, and they're responding to tweets and Facebook comments."
- Rubesh Jacobs, principal at Kasina
"Mutual funds we are working with have taken a much more hands on approach to creating and maintaining their websites. They want their websites to be comprehensive. They not only want their sites to have information about their products, but also have chosen to include real time interactive data, such as performance data, prices and holdings. They are using their websites to provide interactive links to interviews or videos on a near real time basis when their advisors are in the press and news. The funds are also incorporating within their site shareholder access and the ability to communicate with their potential investors via online fulfillment requests."
- Larie Lydick, senior vice president of technology at Gemini Fund Services