Confluence is a data management and software company whose heritage lies in US mutual funds. The firm started out providing technology to automate the calculation and distribution of NAV prices for US mutual funds. Over time, the Confluence platform has grown to encompass financial reporting, expense management, regulatory reporting, etc.
One of the problems the industry faces today is that regulatory reform has created a shift towards a more intrusive operational oversight. Currently, in relation to data management and the problems thrown up by Annex IV reporting under the AIFMD in Europe managers tend to be somewhat reactive. As Nicola Le Brocq (pictured), the regulatory and compliance analyst at Confluence, notes: "The plethora of regulation currently in force and scheduled for future implementation is resulting in managers having to source and manipulate data in numerous ways and to numerous timeframes with no cohesive approach.
"What is not working today is that the bulk of the focus and cost has been allocated to building out compliance teams to demonstrate substance and responses to supervisory bodies requests for data are isolated and reactive in nature. In order to create efficiency and control you need to have the right system to support that. There's an opportunity for the industry take a more strategic and holistic approach to solving the problem," says Le Brocq.
"One of the themes emerging today is that it is no longer sustainable to run fund management operations in a fragmented way. Reporting needs to be done using a more consolidated approach to reduce costs. Our focus is on how to harmonise our solution suite that we provide to managers in order for them to harmonise all of their reporting obligations," confirms Le Brocq.
At a high level, this may involve developing disruptive technology; i.e. technology that brings an entirely new value-add solution to solve an industry problem rather than being built around existing operations.
The Retail Distribution Review ("RDR") of 2012 created problems for financial advisors in terms of operating in an open architecture way and adhering to new rules on commission and rebate arrangements. Fund research teams have since spun out platforms to help advisers facilitate the advice and be more transparent about their fees and commissions to their clients.
"This could be viewed as a form of disruptive innovation as it has helped to create a new, more efficient process for the advisory market," explains Le Brocq.
"Disruptive technology in our view should solve not only today's regulatory demands but future regulation that managers haven't even had a chance to contemplate," adds Thomas Pfister, manager of EMEA Market Management for Confluence. "That can only be done by taking a new approach to the problem rather than reacting each time a new piece of regulation comes along and using technology to solve the issue.
"We are talking about changing the ways these problems are analysed and planned for before they even become problems."
The goal at Confluence, says Pfister, is to create a unified data-driven platform that enables managers to grow revenue, drive efficiency and reduce their risk.
"In pursuit of this vision we are focused on replacing highly fragmented solutions with a single platform that solves all of the complex data management automation challenges, with a focus on regulatory reporting," concludes Pfister.