Robert Forkan, Head of Business Development at MAIA, explains how larger investment firms can upgrade their front-to-back technology stack with reduced implementation risk.
Investment firms are operating in an increasingly challenging operating environment, which generally become more complex as they grow.
One of the biggest challenges CTOs face, particularly those at large and rapidly expanding institutional businesses, is the combination of existing technical debt and the career risk and cost associated with solving for it, says Robert Forkan, Head of Business Development at MAIA.
As investment management firms grow larger over several years, they often accumulate multiple models that create complexity that is no longer sustainable. And for managers that trade different asset classes involving multiple connections with multiple counterparties across different systems, it will likely be even bigger problem, especially if trading volumes are growing too.
“Just one weak link in the investment process could deal a devastating blow to your business,” says MAIA’s Forkan. “Not only is technical debt a drain on resources, replacing it can be costly and impact profits at a challenging time for many managers.
“And even where there is a solution, some organisations can be quite slow-moving in making a decision and averse to change, due to the potential magnitude of the transformation project.”
Investment managers will often hold a large amount of historical data that needs to be maintained, integrated, and reused in new systems. Such data management and transformation projects are among the most complex and expensive that an organisation can undertake.
However, resolving technical debt would allow firms to concentrate on what they do best: that is to deliver strong investment returns.
“In the past, investment managers might have taken a ‘big bang’ approach to their stack, a more costly and slow process that involves partnering with one or a very small number of organisations to replace a large proportion of their systems,” says Forkan.
“A ‘big bang’ style replacement would involve a large-scale project requiring each part of the business to plan and report on implementation, a range of consultants to answer questions, and a full complement of staff.”
Such a process can create inefficiencies due to the number of people and amount of communication involved and can carry a bigger implementation risk if things go wrong, he explains.
But open-architecture software and fluent APIs enable an alternative approach that can reduce the risk of change.
An interoperable approach
Interoperable, modular solutions can allow firms to de-risk the operational change and leverage additional value from their existing resources.
“Instead of replacing their entire front-to-back technology stack, modular solutions allow CTOs to upgrade specific parts by interacting seamlessly with off the shelf solutions. Such an approach can increase the performance of the existing stack”, says Forkan.
“The message we are getting from CTOs is that they would like interact with a truly cloud native, engine based architecture. They want to subscribe to functional engines via a fluent, high performance API.” he explains. “That is where firms like MAIA can help.”
Modular platforms often have a wide range of functional capabilities covering the whole investment lifecycle, from portfolio management to order execution tools and everything in-between.
By identifying where the issues are within your stack, modular platforms can implement a solution relatively quickly.
“We have found that an API-led modular platform, such as MAIA’s, can help remove pain points in a fraction of the time and cost, when compared to a complete front-to-back replacement,” the Head of Business Development at MAIA says.
A platform built in the industry
MAIA’s platform was built on a multi-asset trading desk and designed to operate in a complex investment environment. Its cloud-native stack offers clients the scalability and flexibility to react when their needs change. And the API-led modular approach enables firms to build their own configured platform, covering an expanding range of services.
We’re continuing to innovate,” says Forkan. “We have recently launched new functionality that allows our clients to visualise their data however they want to across a range of different dimensions and in an unrestricted and flexible way. We have also launched MAIA Mobile”
Since it was founded in 2019, MAIA has been entrusted to run assets under management in excess of $20bn, supporting hundreds of users in six countries.
“We don’t believe there is a one-size-fits-all solution suitable for every firm,” adds Forkan. “Some of the larger platforms are slower to adapt to the changing environment and aren’t interoperable with many systems that investment firms use today.
“At MAIA, we can help pay off your technology debt and vastly reduce implementation risk.”