Should You Keep Your Legacy System?

//Should You Keep Your Legacy System?

Should You Keep Your Legacy System?

A legacy system might work for now, but with new technology transforming the financial services industry, can asset managers afford to hold on to their old portfolio management and accounting software?

Asset Managers Plan To Go Digital

According to a survey of the largest global asset management firms, conducted by consulting firm Alpha FMC, 80% of firm respondents have made their digital transformation a priority.

But for those firms seeking digital improvements, 69% of them cited legacy technology as a primary obstacle; company culture and mindset (62%) and lack of resources and relevant skillsets (46%) are also digital transformation roadblocks.

Old Technology Legacy Systems_Keep or Let Go_EmpaxisBut Does Every Firm Need to Change Its Ways?

Every organization is different. Some firms have developed their own longstanding in-house tools to handle their portfolio management and reporting.

They might have their own functioning in-house quality control systems, too.

A digital transformation may be necessary for one or many, but not all.

Or maybe they haven’t realized it’s time to change?

Legacy System Pros and Cons

Pros:

  1. “If It Ain’t Broke, Why Fix It?”

    You’ve successfully generated clients reports and managed transactional data well on it for all these years, and in light of the new technology out there, your current systems have worked well this whole time, without incident and without complaints from clients.

  2. Easy to Use

    If the legacy system is convenient to use, well, who can argue that? 

    And if it means it’s easy to train new users, and if it means no painstaking efforts to learn a new system, then there may be little reason to change.

  3. The Price Is Right

    If the legacy system fits the budget, again, who can argue that?

    How much will it cost switching to a new setup? How easy will it be to use? Can you guarantee the same quality of reporting and ability to service clients on a new system?

Cons:

  1. The System Is Outdated

    You might think everything is fine, but advancements in asset management technology have come a long way.

    Are you:

    – relying heavily on manual processes?
    – slow to get reports ready for your clients?
    – consumed by administrative work?
    – not offering clients mobile app- or web-based tools to access their investment and performance details?

    If manual processes, slow reporting, admin work, and no mobile- or web-based applications available for your clients are what defines your organizational practices, you may fall behind the competition.

    What you should consider instead:

    – Make it a priority to establish a digital-first strategy.

    – Implement robotic process automation to automate reconciliation and other reporting-based tasks.

    – If you’re worried your firm lacks the skills or resources to set up a new system, contact a managed services outsourcing provider that works with asset managers.

  2.  The Processes Are Inefficient

    Manual work not automated is a missed opportunity.

    So much time can be freed up by passing on various investment-, operations-, and compliance-related tasks to a third-party provider, and likely it can be performed at a lower cost than done in-house.

    Instead of spending more time with clients or focusing on business development, you are consumed by administration work.

  3. Man Destroys Computer_EmpaxisIt’s Inconvenient

    Doing manual, time-consuming, and repetitive tasks is, well, inconvenient.

    Whether it’s rebalancing portfolios to match the model or running the reconciliation reports, you don’t have to spend so much time on this work.

    And it’s not just inconvenient for you, but for your clients.

    The clients, especially younger ones, are increasingly accustomed to accessing accounts on their phones or tablets whenever they want.

    If they can’t access their investment details right away, on their devices. your competitors will make sure they can.

    Read More:
    Why Millennial Workers Are a “Problem” for the Financial Services Industry

  4. It’s Costly

    The system you’re using might be expensive, and for what you’re paying and how little you get, it’s time to switch.

    Even if costs aren’t an issue on the current system, and assuming you’re going the “old school” way, how much does it cost not to change?

    The time wasted not automating tasks could easily add tens of thousands of dollars each year in unnecessary expenses.

    Why tens of thousands?

    Imagine an employee at $25/hour doing work that could be automated. Let’s assume it’s 2 hours per day of automation-worthy activity.

    Multiply the daily cost times 5 days a week, then times that result by the number of weeks in a year worked.

    At 40 weeks alone, you’ve already saved $10,000.

    These are relatively conservative estimates. If your labor costs are higher and the man hours of work to be automated is much higher, the savings will be even greater.

Legacy System or New System? You Decide

Legacy systems are beneficial in that they’ve worked for so long, so why quit now? And if it’s easy to use and cost-friendly, It may make sense to stay put.

But at the same time, legacy systems are less advanced, and they promote inefficient and costly business practices. What’s more, the lack of convenience for clients due to the lack of a digital platform may be an opportunity for your competitors to poach business away from you.

Those who want to switch but aren’t sure how to do it could always consult with asset management outsourcing firms or turkey asset management program (TAMP) service providers.

Whatever you do, always think about what’s good for the bottom line and your clients, as well as how to stave off the competition.

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By |2019-01-24T20:31:38+00:00January 14th, 2019|Blog|0 Comments