**London**: A report by Accelex and FactSet reveals that over half of fund administrators struggle with data acquisition and governance amidst growing private market demands, highlighting the urgency for improved strategies and the potential of AI to streamline operations and enhance accuracy.
A recent research report by Accelex and FactSet has revealed that over half of the fund administrators surveyed are facing significant challenges related to data acquisition and governance. The report, titled ‘Unlocking Operational Excellence in Fund Administration through AI’, is based on extensive interviews with senior executives from 16 leading fund administration firms, collectively managing assets exceeding $13 trillion and employing a global workforce of more than 53,000 professionals.
The findings indicate that 55% of those surveyed regard data acquisition and governance as their primary operational hurdles. Respondents expressed considerable concerns regarding the availability, accuracy, and timeliness of data. The surge in private markets, particularly owing to the entry of retail investors and the expansion of private credit, has compounded these challenges by increasing the volume and complexity of data as well as the demands for reporting.
To address these issues, 25% of fund administrators are concentrating on process automation. However, this approach has been hindered by underlying problems with data quality and the rapid implementation of flawed processes. Notably, only 11% of those surveyed are prioritising enhancements in data quality and governance, despite the direct implications of these factors on the accuracy and timeliness of reporting.
The report highlights a growing trend among fund administrators towards the adoption of artificial intelligence (AI). Some of the respondents mentioned that the implementation of AI technology has the potential to reduce data processing times by up to 80% while achieving near-perfect accuracy.
Additional key insights from the report include a shortage of talent in the private markets sector, with nearly 17% of fund administrators indicating ongoing human resource challenges due to a scarcity of specialised skills, inadequate long-term incentives, and worker fatigue associated with manual processes.
The study also points out the reliance on fragmented systems among large fund administrators, revealing that, on average, such firms utilise six distinct core systems. This reliance contributes to increased operational costs and elevates cybersecurity risks. Furthermore, the report notes that client expectations are on the rise, with clients of fund administrators increasingly prioritising quality service, operational excellence, and compliance with reporting and regulatory requirements when selecting providers.
Michael Aldridge, President and Chief Revenue Officer of Accelex, stated, “The fund administration industry is at a pivotal moment, where balancing operational efficiency with exceptional service quality has never been more critical. As private markets expand and regulatory demands rise, administrators face mounting challenges in data governance, a cornerstone of compliance, scalability, and client reporting.”
In a similar vein, David Mellars, Senior Vice President and Senior Director of Buy-Side Middle Office Product Management at FactSet, commented, “Private markets’ rapid growth has fundamentally reshaped the demands of the buy-side, including fund administrators, driving a need for more timely and accurate data. Better tools will help all market participants overcome data quality challenges, reduce inefficiencies, and meet rising client expectations with precision and confidence.”
The report underscores the urgent need for fund administrators to optimise their data governance strategies and embrace technological advancements to enhance operational efficiency and meet the evolving demands of the market.
Source: Noah Wire Services
