Current market pressures are forcing more asset managers to rethink their operational models in order to cut costs. There are two ways to accomplish cost reduction – decrease services or increase efficiency.
Since service reductions are typically not a viable alternative, much focus is being placed on driving efficiency gains. The best way to increase efficiency is through greater automation:
The success of algorithmic trading is prompting firms to explore ways in which to apply rules-based automation to the back office. Automation within a firm’s operations can be achieved by defining rules or algorithms that operate on the underlying data and derive some result. SunGard calls this “algorithmic operations”.
An algorithm is an effective method for solving a problem using a finite sequence of instructions. Algorithms are used for calculation, data processing, and many other fields. When you combine a list of instructions describing a computation and the data required to perform the computation, you create an algorithm. Each algorithm is a list of well-defined instructions for completing a task. Starting from an initial state, the instructions describe a computation that proceeds through a well-defined series of successive states, eventually terminating in a final ending state. In computer systems, an algorithm is basically an instance of logic written in software by software developers
Firms today are taking the concept of algorithms a step further and applying them to their operations. These rules-based operations or Expert Systems are also known as Knowledge-based Systems and Knowledge-based Expert Systems, are considered to be "applied artificial intelligence“.
HOW ASSET ARENA CAN HELP
Asset Arena offers sophisticated solutions in response to your unique business challenges that incorporate algorithms and rules that can transform your operations and the way you do business.
- Rules describe complex solutions in a verifiable form as the focus is on the outcome and not on the method employed to reach it
- The separation of rules and data overcomes the need to wait for a new release, accelerates the implementation of rule changes, and enables continuous improvement
- The company’s knowledge is documented and made available to third parties (e.g. auditors), and the risk associated with worker substitution is significantly reduced
Hot Topic: Process Management
Product: Asset Arena Investment Accounting
Business Area: Investment Operations