With margins down in the syndicated loan market, asset managers are seeking to operate as efficiently as possible.  However, operational friction between front, middle and back office teams is a hurdle for most firms.  A recent survey by Markit showed that exchanging data within the asset management enterprise continues to be the biggest operational pain point for loan managers. 

To succeed, firms need to modernise credit data management systems to achieve a new level of front-to-back office integration.  We see asset managers focused on two key areas:  real time monitoring of performance and risk for investment teams and enhanced reporting to improve client service and keep pace with changing client expectations.
 
Driven by an environment where the market can switch from risk on to risk off within a single session, 69% of respondents in Markit’s survey say that better access to position and market data and new systems for monitoring credit performance are priorities for their firms.

Historically, investment teams have had to cope with information gaps and lags created by data siloes.  Today’s solutions for the front office centralise information to help investment teams screen the market to evaluate opportunities, track changes in credit quality and easily gauge credit performance.  The result is faster decision making and more precise response to changes in market conditions. 

The advantages of better access to data can be maximized through an integrated platform with enterprise workflow tools that enable teams to collaborate more effectively.  From pipeline management to investment approval to communication about amendments and performance issues that affect asset values, keeping the right people in the loop about investment decisions, status of trades and events affecting positons is key to streamlining operations and optimizing performance.

Just as real time access to information is the focus of portfolio managers and traders, clients are also raising the bar for real time assessment of performance and risk.  Markit’s survey shows coping with investor requests and reporting requirements is the number one focus area of back to front office integration. Thirty nine percent of respondents say that accuracy in reporting is a challenge and 27% say that being responsive to ad hoc requests is a challenge.

There was a time when efficient reporting was primarily a concern for large asset managers, but now even small firms face pressure from clients who expect more transparency and a more holistic view of the market.  Volatility, liquidity and credit performance are among the complex metrics that are increasingly important to investors.  The growing preference among investors for separately managed accounts exacerbates the reporting challenge for asset managers of all sizes. 

What’s required to produce the data for client reporting shares key components with the modern credit data management system described earlier.  It starts with controlling data through a central EDM system.  Business intelligence tools make report design and creation straightforward for non technical users.  Incorporating workflow management tools ensures control over the report lifecycle.

With the data in hand, some firms are taking advantage of visualization technology to enhance the delivery of data to clients.  We observe that asset managers in the loan market are beginning to invest in online portals which enable clients to directly access real time data presented in user friendly interfaces.

While it has become more challenging for asset managers to operate in the loans market, the good news is that modern credit data management systems can help firms meet the expectations of both the front office and clients.  The goal is to use a central data set and an integrated platform to make the firm more nimble, reduce operational friction and deliver a higher level of client service.