Published June 27, 2023 | 2 min read
Key Points
- Considering today’s unstoppable globalization, and the expansion of new asset classes, ensuring investors have access to a comprehensive view of their global portfolio is critical - and will require innovative technology.
- Developing a multi-tenant, single-instance SaaS platform will meet the latest needs of analysts and investment management companies.
- Spending on R&D, innovation and future-thinking could be key to the success of companies in the financial technology space.
For investment management solutions company Clearwater Analytics, innovation is at the heart of their approach to business. Based in Boise, Idaho, Clearwater Analytics is an investment management solutions company providing SaaS and fintech tools designed to automate investment accounting and performance reporting for asset managers and corporations worldwide.
CEO Sandeep Sahai is invested in the future of SaaS technology. Determined to rethink the traditional approach to investment solutions, he predicts we will see the continued democratization of investment management as a result of the world’s digital transformation.
A challenge for modern investors
Today’s investment landscape looks very different to that of the past. With globalization opening up international opportunities, and the expansion of new asset classes, portfolios are becoming increasingly diverse and complex. And as a result, investors are facing a new challenge. How can they ensure a comprehensive view of their entire global portfolio?
Finding a solution to this challenge is key, as making performance decisions or managing risk relies on a whole-portfolio view, according to Sahai. As investors turn to investment management solution companies to assist with performance reporting, risk mitigation, analytics and accounting, they will require a holistic whole-portfolio approach to these services.
Why multi-tenancy architecture?
So, what is the solution? According to Clearwater Analytics, the answer lies in multi-tenancy, single-instance software. Something which could prove controversial in a space where, as Sahai states: “everybody thinks they are unique.”
Multi-tenancy is a core benefit of SaaS. Early cloud computing required individuals to access software in a single instance: each customer had their own database, without sharing capabilities. Today, software innovation has meant that a software application can serve multiple customers. And while the rapid adoption of multi-tenancy SaaS and cloud solutions can be found across multiple sectors in the economy, fintech has been slow on the uptake.
“I feel everybody is going to move to single instance, multi-tenancy architecture,” says Sahai. “While everybody in the financial services space thinks they are unique, about 80-90% of what we do is the same. It makes no sense for every institution to do it all by themselves.
“SaaS allows you to launch improved products on a daily basis. Everybody uses the same software at the same time. We innovate using machine learning, using Robotic Process Automation,” says Sahai.
There are some risks to this innovative approach - particularly around security. However, the benefits for financial institutions appear numerous and include affordability; integration with other applications through APIs; and maintenance handled externally by the software provider.
Innovate - or fall behind
For Clearwater Analytics, innovation is critical. The company is determined to embrace change in the financial technology industry, and as a result, currently invests 25% of their revenue on R&D.
“Tech has moved on, but the financial industry has simply not kept up. We are behind the curve of innovation. Companies like Clearwater are trying to change that,” says Sahai.
“As everyone is beginning to have equal access to information, power is beginning to leave established institutions. It is being spread more evenly to good analysts who now have access to a broader group of investors digitally.”
This change, according to Sahai, will shape the future of the investment management space. And is the motivation behind a commitment to innovation.
“When you look at financial technology it is just legacy technology after legacy technology. But I feel like the ability to continuously and forcefully innovate is what wins.
“Innovation can’t just be a program. It has to be built into what you do everyday.”
This content is based on commentary and analysis from RBC Capital Markets' Global Technology Internet Media and Telecommunications Conference hosted in New York, NY on November 15-16 2022. For more information about the conference, please contact your RBC representative.
