On-premise or SaaS? The decision asset managers must make for effective compliance

July 8, 2024

Key Takeaways

  • Technological solutions help manage complex, evolving regulations
  • Asset managers of all sizes need joint-up workflows and systems
  • SaaS has edge over in-house solutions in future-proofing firms

One of the biggest investment decisions asset managers make is picking the right technology infrastructure or partner. Getting it wrong can be costly, regardless of a firm’s size.

Leaders in compliance, technology, and investment must navigate multi-layers of complexity across global markets, from complying with evolving regulations and monitoring portfolios in real time to policing against cybersecurity threats. They must do this while strategically planning how to scale and retain customers and keeping a tight rein on costs as fees become pressured by new competitors.

Disjointed workflows and outdated systems where manual interventions of easily automated tasks no longer make the grade when it comes to policing rules, catering to clients’ demands, and building a thriving business.

A fundamental question asset managers often ask as they examine their needs and consider upgrading is: Do we build and run our own technology onsite or outsource it to specialized Software as a Service (SaaS) vendors? However, their needs are often more nuanced and require flexibility, with in-house products developed on top of outsourced solutions.

Who needs what

  • Compliance leaders: Following regulations is vital to preventing penalties, brand harm, and income loss. They need solutions that safeguard income and image, automate, and efficiently manage compliance workflows, and conduct auditing quickly and effectively.
  • Technology leaders: Preventing reputational and financial harm requires fast, effective, dependable infrastructure. They need high-quality, fast technology and simplified infrastructure that lowers expenses, and solutions that improve and speed up business support.
  • Investment leaders: Mistakes in investing and breaking rules can result in penalties, harm to a brand’s image, and revenue loss. They need solutions that prevent mistakes in investing, safeguard businesses from financial losses and penalties, help provide the best service possible to their clients, and have efficient auditing capabilities.

Judging the options

Each firm’s situation is unique, and requirements, not to mention budgets, differ, so the technological path they embark upon varies. There is no one-size-fits-all solution.

Let’s compare on-premise solutions and cloud-based SaaS for asset management leaders.

Developing on-premise solutions offers:

  • Customization: On-premise solutions allow for more customization to suit clients’ specific needs, but they also demand more time and resources to implement and manage.
  • Control and data sovereignty: On-premise solutions give the clients direct control over their infrastructure and data security, as well as more compliance with local regulations on data storage and processing.
  • Complexity and security: On-premise solutions require dedicated IT resources for maintenance and upgrades, which can add to the system’s complexity and cost. Clients also need to evaluate their own security protocols and data protection measures to ensure the safety of their data.

Contracting SaaS offers

  • Access Anywhere: Cloud accessibility allows investment leaders to monitor compliance from any location
  • Agility: SaaS solutions allow rapid deployment and scalability, enabling compliance teams to adapt to changing regulations swiftly
  • Automated updates: Regular updates ensure compliance with the latest rules without manual intervention
  • Collaboration: Cloud-based platforms facilitate collaboration across teams and geographies
  • Cost-efficiency: SaaS eliminates upfront hardware costs and reduces ongoing maintenance expenses
  • Focus on Innovation: SaaS offloads infrastructure management, allowing technology leaders to focus on innovation
  • Integration: Seamless integration with other cloud services and APIs
  • Predictable Costs: Subscription-based pricing simplifies budgeting
  • Scalability: Scaling up or down based on business needs is easier

SaaS in the ascendance

The list of benefits SaaS can provide in terms of effective compliance in asset management is long, but customers must be aware of the few challenges that exist:

  • Data security: Worries about data safety.
  • Speed of delivery: Internet speed impacts efficiency.
  • Lack of control: Users depend on the service provider’s system.

Therefore, it is imperative that they vet their technology partners carefully to reap the rewards of SaaS and the cloud.

Leaders need a complete solutions package that provides real-time, automated pre-trade and post-trade compliance checks; centralizes business data; offers teams instant, real-time visibility across the organization; facilitates API integration with existing solutions, enabling data and feature sharing across systems; gives customers visibility into their portfolios; and which reduces costs, eliminates manual upgrades, and offers optimal performance and security.

A fundamental advantage of SaaS is its inherent flexibility through which firms get the best of both worlds – they can develop custom solutions on top of open APIs.

SaaS enables compliance leaders to be better positioned to tackle the rigorous and evolving demands of regulators and customers. Those who opt to develop solutions uniquely in-house will fall behind in future-proofing their business. Those businesses who take advantage of the benefits that SaaS provides stand a greater chance of prospering.

ION Markets

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