Episode Transcript
[00:00:07] Speaker A: So, welcome to Perspective First, a podcast series by A and M's financial services industry group where we speak with sector thought leaders about the latest trends and hot topics within the financial services sector. I am your host, Alberto Corvo. And today's episode we'll be talking to Mike Genesewski, the COO at Alterdomus. Mike, thank you very much for being here.
[00:00:29] Speaker B: Thank you for having me, Alberto. Excited to be here.
[00:00:32] Speaker A: Perfect. So we're going to be talking about the asset servicing industry and the new trends and what's going on and obviously we'll bring the perspective of what we hear in the market and from our clients. And Mike will bring his very, very long experience within the asset service industry. Mike, do you want to tell a bit about yourself and what you've done in the last number of years?
[00:00:55] Speaker B: Sure. So, most recently I joined about a year ago as the COO of Alter Domus, which is one of the world's largest private asset servicers. We have just over 1.3 trillion in global assets under administration, a little over 5,000 employees. We serve clients out of 39 offices globally. Just prior to this, I had a similar experience as the COO of Bank of New York Mellon's asset servicing group. And before that I was actually on the investment side of the industry, running operations for a large investment manager called Invesco.
[00:01:27] Speaker A: Fantastic. So being a tech guy here at Alvarez and Marcel, I run the infrastructure vertical.
When I think about technology, it's really, how do you see the evolution of technology in terms of enhancing client experience and providing value add services to the client rather than just a tool to execute a task? Faster, better, cheaper. And how specifically in this, how do you see the trend towards more personalized services to asset managers that I keep hearing and the role of data and analytics in providing this and the ability for asset servicers to kind of go Amazon on their clients and kind of be able to predict and serve their needs in a really, really tailor made fashion. So how do you see, what are you hearing about this in from your industry peers and in your organization?
[00:02:28] Speaker B: So look, it's a great question. I think what we're seeing happen is alternatives as an industry basically maturing in the same way that many of the other financial services industries have matured over time. So technology in service of the client first appeared in the back office where the servicers are doing things better, faster, cheaper, through automation, through some sort of technology enhancement, OCR even even years ago, those types of things. And, and then we progressed ourselves into the middle office and now what's interesting and exciting from a technology perspective is the client experience is expected to be digital, right? Which means the clients are interacting with, in our case, their, their GPS and their LPs in a digital way.
They're asking questions digitally, they're getting answers digitally. And as the industry has become much more sophisticated in terms of the risk management and the way they monitor and manage investments, they've become inherently more data driven as well. And this confluence between I need more data, I need it tailored to purpose, I need you to support my decision making with, if you like. The same sort of digital experiences that we've become accustomed to in our personal lives have started coming together and showing up in things like interesting client portals, mobile experiences and other ways to interact with the servicer at a very, very profound, deep level, but a very convenient level and in many new ways that you couldn't do prior to having a technology infrastructure.
[00:04:00] Speaker A: Yeah, that's very interesting. What is interesting is that it's no longer just for the front office of your clients, but it's really different experiences for the different roles throughout the stack from having the idea, executing the trade and all the way different people want to see it differently and the technology that you provide to them needs to be able to do this with flexibility. Otherwise it would become cost prohibitive for you to create all different reports. So is that something that you're seeing? Because that's something that we are definitely seeing. How do we create these seamless experiences with a high level of depersonalization on a per user basis at the client side?
[00:04:39] Speaker B: 100%. So it's different tools for different purposes across. What's exciting in the alternative space is that we're finding that these personalized tools or these personalized experience now if you like, speak alternatives. So the information in the language of the type of work that each of these individuals do is starting to get built into the system. And then what's further interesting is we're actually using technology to have these roles work together better as well. So while the experience is tailored and the tools are tailored, the way you're interacting with the system on the back end is actually in a shared data model. And that does something very, very special because it takes us from a world where we had breaks and we had to reconcile information and we had to think about things before we could show it to a client, to a place of a client's actually seeing and interacting with the data as the servicer is working inside that same data model. And that opens new chapters up for collaboration for Thinking about things quickly and for offering better quality in terms of the service experience and in terms of timeliness.
[00:05:44] Speaker A: Right. I would think things such as, you know, being able to strike the P and L faster because you reduce the number of errors, you reduce the number of discrepancies, you reduce, I mean, that must have been something that your clients really appreciate. And that's definitely been one of the big changes in the projects that we have done on this specific topic. What is that? Your experience on that?
[00:06:08] Speaker B: It's absolutely true. So we're seeing increasingly, not only in the clients we're working with, but in the RFPs that we're responding to, that there is a hunger for timely information. So whereas in the private equity space, we will strike a nav or we'll do bookkeeping activities potentially at the end of the month or the end of the quarter ahead of providing some sort of financial filing, the client's actually using that information to make investment decisions day to day. And they need that information to be available day to day. And so we find ourselves reviewing our processes, but making much better use of technology and data to make sure that they are able to look at the same information we're able to look at on a day to day basis. They can make decisions that communicate with us in a more real time basis. And ultimately the work products at the end become real time by that fact as well.
[00:06:56] Speaker A: Yeah. And this brings me to the next topic. As I think through this, it's really what are the challenges that you see coming? So one you kind of mentioned data is the big enabler, and data has been the big enabler for a number of years is nothing new here. But the challenges of data with bigger data, more real time data, distributed data, different people accessing the data, there's a number of issues there. So that I would imagine it's one of the challenges that you guys are experiencing. I'd be curious to hear how you guys looking at it. What are you doing in that respect. But also I like to have your take on what do you see as the other challenges that the industry is facing as a whole?
[00:07:42] Speaker B: So data management looms large as one of maybe the most persistent challenges, I'd say, in financial services and certainly in our space.
What are we doing that we're doing about it over time? Obviously, a lot of investment in cloud and infrastructure and those types of technologies have made the data more manageable. Manageable, as you say, for large data sets and places where we just have to move around a lot of information and support decision making. Of all sorts.
And then the next step becomes really, how do we think about standardizing the information? How do we think about extracting it from interesting sources that might not have been possible before? How do we create efficiencies? Private equity by its nature, private credit by its nature, are still somewhat manually driven. Very, very flexible investment assets. And to be able to create a standard model that deals with something that is inherently so flexible is a real challenge. That's that we're getting there, and some of the new technologies and the things we're seeing on the horizon are becoming essential to doing that. So we had OCR before. Now we have generative AI sitting on the OCR when we look forward. Right. We have a system that we can not only have, interpret information and store information and structure information that while preserving that same flexibility, now we can ask questions of that same machine. We can identify trends, we can look at contracts, we can say, hey, this, this is a familiar term. We've seen this before. This is a little bit different. And by being able to look at that data in aggregate, ask questions of it, we find ourselves also being able to provide advice to our clients in new and different ways, whether it be, this is how you set up a jurisdiction, this is how you think about your operating model structure, this is how you think about the way information should flow between your systems and ours.
[00:09:28] Speaker A: Yeah, and that's an interesting point because as I see this, all of this started as a push for efficiency.
[00:09:36] Speaker B: Right?
[00:09:37] Speaker A: How can we do it faster, better, cheaper, as we said, how can we be more connected to our client? How can we do all of this in a way that doesn't require us to throw the proverbial bodies at the problem? At the same time, I think that there's a major shift towards what used to be we're going to do these investments for efficiencies, but as a byproduct, and now more and more as the main product is provide better experience.
[00:10:04] Speaker B: Yes.
[00:10:05] Speaker A: The client.
So go ahead.
[00:10:09] Speaker B: Yeah, so look, I'm obviously excited on this topic. The idea of moving from efficiencies to experiences is the big trend from a technology perspective. And it's interesting to see an audience that has been maybe very institutional by nature, very focused on really, really sophisticated investing up until frankly, very recently, almost neglecting the client part of the experience and by sort of maybe not spending as much time there. And of course, right, our clients are focused on fundraising, they're focused on deploying capital, they're focused on great investment returns, but they're also focused on making sure that their clients are apprised of what's going on, that it's easy to work with them, that they understand that the clients are well, well apprised of the information required to understand how the GP is performing and even conveniences. Right. And I think this is, this is where it's changing in terms of an experience. Of course I want to see performance and cash flows and benchmarks about any investment I make as a client. But I also want to go in and make changes to my personal info. Sometimes maybe I need, if you're in the US, a K1 document to support a tax filing. All of those are experiences that maybe we've. We're accustomed to in, in the rest of our lives. And finally we're able to start seeing that in, in this institutional space. And that's very exciting.
[00:11:35] Speaker A: Yeah. And, and what is interesting is that the, the asset servicing that was. Has been seen historically more as like providing the engine and the. Okay. Something that needs to be there. But that's okay. I mean, we really don't want to talk about it to more and more. Okay. How do we actually make ourselves part of the overall experience that the client has and a part of everything that we do. And that I think has been the biggest mood shift in the overall industry, at least from when I talk to my clients and when I talk to what they need. So the demands of their clients has been shifting over the years. Right. So we mentioned the personalization and customization, we mentioned the tech and the digital experience and obviously that's all great. But I gotta believe that you experience cost pressure from your clients that you mentioned RFPs, the ability to compare more apples to apples. How do you differentiate yourself? How do you provide better experience but also better cost efficiencies, which are definitely in the mind of. Of all the players.
[00:12:46] Speaker B: Look, I mean, we're a little bit in the business of selling operations for a living to our partners, which is kind of a fun thought, but in, in terms of the sale, the real value proposition of a place like Alter Domus is we sell quality in operations for a living. That doesn't mean just cost efficiency, but that's part of it. It also means that we can scale with our clients. It also means we can customize for our clients. We can provide our clients advice and help them enter really any market in which they like to operate on an SPV or a funds basis anywhere in the world today. Right. If we weren't excellent at operations, if we didn't know how to grow with Those clients, whether they be smaller or middle market firms to much more established, larger players in the industry, we wouldn't have the same value proposition and we would be seeing the growth that we're seeing today.
[00:13:38] Speaker A: Yeah, and what about what other.
How are the needs of the clients shifting?
What are they telling you that is coming down the pipe for them and hands for you?
[00:13:49] Speaker B: Well, we're seeing maybe a little bit of a combination of pressures and trends, external pressures and trends. It's no secret that there's larger pools of capital awaiting deployment than there ever have been before, which means there are larger risk exposures from NLP perspective than maybe there ever have been before. And now there's a persistent interest from our clients clients in how these GPs intend to deploy the capital, how well they're doing at it, how they're thinking about it, how they're dealing with the investments themselves in a more quantitative way, which means numbers on data and more timely interaction than maybe we've ever seen before. So I feel like the client experience is being driven a lot by client demand for more information, more flexible information, more timely information.
And then we go further, right? And then we say, and it needs to be packaged the right way, it needs to be presentable. The solutions to providing me the information need to be flexible, they need to be mobile, you need to meet the client now where they are in a digital way to be successful in the space.
[00:14:59] Speaker A: Yeah, no, that's very, very fair. So look, as we come towards the end of this, I was thinking, look, it's interesting, the requirement that they demand from clients for better experience and the shift to personalization and in some ways the Netflixization of the experience in all aspects of something, as you said, used to be very back office oriented and very back of the house is becoming more and more front of the house. It's interesting as you think about the shift in technology, which over my career has been the most interesting part from just do it faster, better, cheaper to do it actually in a better way for the client in a more personalized way and in a way that you can predict what they're going to need and the immigration away. I think if I read between the lines of what you were saying that yes, you got to be cost efficient, that you got to be cheap, but it's much more important to sell excellence and people are happy to pay for excellence and to engage with vendors that provide this excellent through all sorts of angles.
If you had a final thought about this, in an industry that's going to radically change due to AI due to DLT coming, all of this. What are you thinking?
[00:16:33] Speaker B: Well, so what's exciting about this business is the degree of change and especially most recently the degree of innovation that we're seeing from a product perspective, from an experience perspective, from a technology perspective, things that we weren't really talking about too long ago in terms of various solutions to liquidity, nav financing, looking at a secondaries management and taking full advantage of what private equity, real estate, private credit markets can do for end clients, open ended funds.
These are all really, really interesting challenges and things that frankly the most sophisticated firms shouldn't have to worry about implementing. And so if there's a final thought, I think I would encourage anyone listening to this podcast in the business to really take a look out at the market, understand what, what providers are doing today. One, you might be surprised in the degree of technology innovation coming from your third party administrators, but also you might find that there's just different operating models and different ways that you can deliver great investment outcomes and produce terrific fundraising as a private equity firm than maybe were available to you even five years ago. The state of the art now is full stack. The state of the art is very data driven and the state of the art is focused on delivering excellent client experiences regardless of the role or the interaction that you would have with your provider or your GP or your lp. And so it's a very exciting time to be in the business where we're going to be setting new standards here I think for the next decade.
[00:18:12] Speaker A: Fantastic. Well, exciting time to be in the industry. I completely, completely agree and I'm glad I get to speak to people like you that are really visionaries and try to see what's around the corner, what's in the future. So at this point I just wanted to thank our audience for listening in. I hope it was interesting. Thank you very much Mike for your time and expertise and we'll speak with you soon. Thank you.
[00:18:38] Speaker B: Thank you, Alberto.
