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Trends in FinTech with a view towards SimCorp

Looking forward into 2023 we can identify some trends that are to be expected throughout the year. Generally speaking, the global economy is likely to continue its recovery with stimulus measures from governments and central banks expected to boost consumer spending and investment, leading to economic growth.

The economic recovery is though likely to be uneven across different countries andindustries with some sectors seeming more likely to take recover more quickly, such as the finance sector.

As individual financial organizations strive to optimize their operations and improve their bottom line in an effort to be more efficient, asset management software is becoming increasingly important to them to achieve this end goal and we can expect to see a number of trends shaping the financial market for asset manager software solutions.

Top 5 trends

In this piece we are going to take a closer look at some of these market trends and look at what SimCorp is doing.

Greater focus on data analytics

Asset management software is increasingly being used to collect and analyze data from a wide range of sources, including sensor networks, IoT devices, and other connected equipment. This data can be used to improve the efficiency and effectiveness of operations, as well as to identify potential problems before they occur.

SimCorp has transformed its Data Care solution into a service they call Data Management. Data is sourced from multiple vendors and amalgamated using deviation rules, identifier matching and giving priority to trusted vendors to create a golden record. This is done using the software GAIN SimCorp acquired back in 2019 (see press release here). The idea is that the golden record is fed to SimCorp and any other 3rd party system requiring the golden record,

The solution is standardized with room for minor customization, while SimCorp manages the whole process on behalf of their clients in a Software as a Service (SaaS) setup. Consumption and delivery is via a digital reporting portal - formerly known as Coric.

Cloud-based solutions

Cloud-based asset management software is becoming more popular as organizations look to reduce costs and improve scalability. These solutions are also typically more secure and easier to manage than on-premise solutions.

This is an area SimCorp embarked on back around 2015, but has truly ramped up their effort in the last 3 years. According to their annual report 2022, they now have over 50 clients in the cloud (or SaaS), with a target of converting 10 current on premise clients to their SaaS platform per year. On top of this number comes new clients where they expect the vast majority will go directly onto SaaS.

Having customers on the cloud has enabled SimCorp to expand their offering to includes Business Processes as a Service - or BPaaS. Last year they launched an Investment Accounting Service which we took at closer look at in this article, and in December 2022 they signed a deal with InTech who is going to use the new service Investment Operations Service, covering post-trade operations and reporting - see the press release here.

It is clear that SimCorp's focus in on cloud. The age of the underlying code and truly cloud-enabling the platform is a challenge they face. But equally they must succeed in keeping up with demand while continuing to provide high quality service and security to their customers.

Artificial intelligence and machine learning

As AI and machine learning continue to evolve, we can expect to see more asset management software solutions incorporating these technologies to improve decision-making and to automate tasks. The race for AI and ML was truly kicked into higher gear the last couple of weeks with ChatGPT/Microsoft and Google's Bart.

This is also an area SimCorp is focusing on through partnerships, integration 3rd party software solutions into various business modules. One example is a partnership with Alkymi which we looked closer at in this article. This solution is an intelligent document processing and workflow automation that can interpret documents, process them and automatically act on them.

This is only the beginning of what Artificial Intelligence can bring, and we are bound to see SimCorp being able to learn from past errors and fix them without any human intervention - in a much wider scale than we see today.

Mobile-friendly solutions

With the growing popularity of smartphones and tablets, we can expect to see an increased demand for mobile-friendly asset management software solutions that can be accessed from anywhere and at any time.

SimCorp's strategy in this area has been less prevalent, probably because of the sensitivity clients have around their own data and hence this having been in less demand. A newly branded Digital Portal allows users to access data from their cloud environment on any device - this is based on Coric.

Alternatively clients can access data is via BI tools from the SimCorp Data Warehouse. This has become a lot more popularity widely used, and has advantage that most BI solutions comes with apps so data can be accessed anywhere.

A third option is the SimCorp API's, This does require development on the client side to setup, and has not yet reached maturity.

Greater emphasis on sustainability

As organizations become more aware of the environmental impact of their operations, we can expect to see a greater emphasis on sustainable asset management practices. This could include the use of renewable energy sources, as well as the use of software solutions that help organizations track and reduce their carbon footprint.

SimCorp is no exception when it comes to focus on sustainability. In their product SimCorp Dimension they have developed a solution to support Environmental, Social and Corporate Governance -- ESG. The solution is an extension of a solution first built for alternative investments, called Flexibly Performance Indicators. This enables clients to transform, import, and calculate an unlimited number of ESG data points of various types for greater flexibility.

The solution comes with some pre-configured setup that should help clients get onboarded faster. The number of data vendors in this space is overwhelming as is the complexity of the data, so this is an area that keeps evolving, also for SimCorp clients.

The future is here

Overall, the market for asset management software is growing rapidly and we can expect to see a number of exciting developments in the coming year. With the right software solution, organizations can improve their operations and drive greater efficiency and profitability.

Alongside these individual efforts, it will be important for policymakers to carefully manage the economic recovery and address concerns such as inflation and trade tensions in order to continue on a path of recovery and to ensure a sustainable and equitable recovery for all.

If you are curious to hear more or would like discuss this or other SimCorp related trends, please reach out. You can book a call with Ebbe Kjaersbo on this link. We look forward connecting and talk about the future!



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