Even the most relationship-driven businesses are not safe from the everlasting march of technology

“In short, software is eating the world.” — Marc Andreessen

Even the most relationship-driven businesses are not safe from the everlasting march of technology. The fund management industry is no exception, and the introduction of new data tools and connections have propelled the industry into a state of upheaval.

In 2025 Global Assets under Management will almost double in size from USD 84.9 trillion in 2016 to USD 145 trillion. In turn, this will propel the global investment management software market to reach USD 5.76 billion by the same year. With legacy players charging several hundred thousand dollars per year for their all-or-nothing solutions, it is no wonder that competition has emerged eying a piece of the pie. The global asset management software market to expand at a CAGR of 9.1% during the forecast period.

The traditionally stoic and relationship-driven industry of private market investment is not being spared from the rise of technology. Increasingly the fund managing industry is looking for software to make their activities more efficient and profitable.

Aiming to be more nimble and agile than the incumbents, it is no wonder that new niches are being carved in this traditionally stoic and corporate space.

What is Investment Management Software?

Investment management software is any software solution that aids investment professionals in carrying out their day-to-day investment activities. The tools are typically used to support middle-office activities such as record keeping, portfolio tracking, audit and compliance tracking, LP management and communication, and other tasks open to automation. Fund management solutions range significantly in focus, use cases, and targeted users. For example, some solutions target the management of unlisted assets for HNWI, while others are squarely aimed at large portfolios of listed securities for pension funds. This makes the market hard to delimit and compare solutions.

Source: © iTech Capital

Investors’ needs from fund management software are diverse and depend heavily on who is the intended user. Universal, however, is a desire for the tools to be streamlined and easy to use, not necessarily an easy task in such a technical and data-rich industry.

New upstarts are emerging, presenting their twist on what fund management for VCs and PEs should look like. They have come to the forefront by riding the wave of newly adopted technologies such as Business Intelligence suites, NLP, and API integrations to offer cloud-native SaaS solutions to small and medium-sized fund managers.

Source: © KPMG/CREATE — Research survey 2018., Data-As-A-Service 2019: Attitudes, Accelerators and Obstacles, Simcorp Gain July 2019

In the near future, further technological developments will continue to have an impact on the fund management ecosystem. Competitors will be pushed to provide a higher level of service. In particular, streamlining integration with existing services will be a top priority. Below are some examples of potential developments in the industry:

2020 — Rise of the API: “Plug and Play” integrations.

2025 — Machine Learning: “Smart” heuristic analysis and value-added reports past simple charting.

2030 — NLP: Automatic, Reliable Natural language processing (NLP) data imports.

Having developed our in-house fund management solution, AIRR, we were eager to explore the market and discern the upcoming forces on this industry. Whether you are a discerning GP looking to streamline your operations, an LP looking for best-in-class tools to suggest to your investors or the final UBO, we hope we can help shed some light on the wide and behind-the-scenes industry that is fund management software.

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About the author

Julia Momblat
By Julia Momblat