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The financial industry across Europe and the UK is in the midst of a profound transformation. The aftermath of Brexit has triggered a significant reorganization, leading to a complex merging of diverse regulatory frameworks.
Simultaneously, an increasing emphasis on operational resilience, driven by new mandates such as the Digital Operational Resilience Act (DORA), is fundamentally reshaping how fund managers and asset servicers operate. This also brings DORA’s ICT pillars into focus, forcing a practical rethink of system inventories, escalation speed and risk dependencies.
In this rapidly evolving and highly scrutinized environment, the limitations of legacy systems are becoming painfully apparent, highlighting a pressing need for modern, agile solutions.
Historically, operational resilience was often treated as a secondary concern within asset management, with many firms opting to outsource functions without fully recognizing the inherent risks associated with reliance on disparate, often antiquated technologies. Regulations like DORA are now changing this mindset, demanding a much more robust and proactive approach to business continuity and data integrity.
Organizations often maintain separate, frequently manual, contingent Net Asset Value (NAV) solutions as a backup. While these provide a form of redundancy, they are often expensive, labor-intensive, and represent a significant drain on resources. The industry is seeking more lightweight, automated, and real-time secondary contingent NAV solutions that can be seamlessly integrated into a broader, more powerful platform. This shift not only enhances resilience but also drives significant efficiency gains by eliminating the need for costly, redundant legacy infrastructures.
Beyond simple redundancy, the industry faces several key operational and regulatory drivers. The global push towards shorter (T+1) settlement cycles requires a significant acceleration in the speed and accuracy of NAV calculations, but legacy systems often struggle to meet these compressed timelines. The need for highly efficient and automated contingent NAV processes is paramount for ensuring operational continuity and meeting regulatory obligations.
Many asset servicers, in particular, find themselves managing a fragmented ecosystem of platforms for different functions, such as IBOR, ABOR, the middle office, and the back office. This fragmentation leads to inefficiencies, increased market data costs, extensive reconciliation efforts, and limits the ability to reallocate valuable human resources to more strategic, value-added activities.
The core challenge for fund accounting and investment operations today is the need for truly versatile platforms. An ideal solution should extend far beyond mere backup capabilities, acting as a comprehensive middle office solution and handling primary NAVs across a diverse range of asset classes, including both traditional and alternative investments. This type of all-in-one platform consolidates critical functions, offering efficiencies and cost savings that are simply unattainable with fragmented legacy infrastructures.
For firms operating across international borders, the platform’s ability to adapt to varying accounting regulations is non-negotiable. Seamlessly handling global standards such as IFRS, Local GAAP, e.g., FRS 102 and BE GAAP is crucial. Imagine the complexity for a Belgian family office with subsidiaries in Paris and the UK, all ultimately reporting to a US headquarters. In this scenario, multi-view capability with automatic translations becomes indispensable for accurate and consistent reporting across all entities and jurisdictions.
Perhaps one of the most significant pain points in the industry is the slow pace of regulatory change adoption within legacy systems. These older platforms can take 18 months or more to implement new modules or upgrades, often at considerable additional cost. This creates a continuous compliance burden and hinders a firm’s ability to adapt swiftly to new mandates.
A modern, cloud-native approach to platform development offers unparalleled agility. New features and regulatory updates can be rolled out with far greater frequency – for instance, quarterly, with a strategic goal to move to monthly deployments. This ensures that firms are always compliant and always equipped with the latest functionalities, transforming what was once a compliance drag into a competitive advantage. Significant enhancements, such as private credit coverage for ELTIF 2.0, can be completed within a single quarter, demonstrating the speed and efficiency that the industry now demands.
The traditional financial industry’s inherent redundancy, with separate systems for various front, middle, and back-office functions, is unsustainable in today’s environment. The future of fund accounting lies in platforms that eliminate this fragmentation, delivering significant cost savings, operational efficiencies, and a future-proof foundation.
Furthermore, successful modernization extends beyond technology to a client-centric philosophy. Firms need partners who prioritize client success, offering transparent support and training that empower them with self-service capabilities, rather than relying on a traditional consulting model burdened by hourly charges or per-module fees. This commitment to transparency and empowerment ensures that firms can truly maximize the value from their investment in new technologies.
Embracing modern, unified platforms isn’t just an upgrade – it’s a strategic imperative for a more resilient, efficient, and profitable future in EMEA’s complex and evolving fund accounting landscape.
Three Practical Steps to Get Started
- T+1 readiness scan: Map your affirmation, allocation, funding, lending, and collateral cycles. Pinpoint the intraday control gaps indirectly pressuring NAV cycles
- Resilience gap analysis: Identify important business services, define impact tolerances, test them, and build a short, honest glidepath to compliance (EU and UK separately).
- Target-state architecture: Find the biggest fragmentation hotspots (IBOR/ABOR split, market-data duplication, reconciliation estate).
If your platform still thinks in end-of-day batches and year-long upgrades, it’s a perfect opportunity to change and think about how you get resilience, speed and lower operating costs at the same time. This is the bar DORA sets for risk management, evidence and response discipline.
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