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CASE STUDY

Data Products for Fund Managers

Helping DST Systems prototype value-adding data products

The Client

In the UK, DST Systems (now part of SS&C Technologies) is the industry leading Transfer Agency and associated Business Process Outsourcing provider for the Asset Management industry. For over 40 years the firm has offered a full range of options, from technology outsourcing to co-sourcing of selected back-office operations to full business process outsourcing.

As of 2018, DST Systems was responsible for processing over half of all transactions in and out of UK investment funds, on behalf of many of the biggest names in asset management. Given its long history and market presence DST had built an unrivaled dataset that spanned the UK mutual funds marketplace.

THE CHALLENGE

The business’s Applied Analytics division had received a mandate from the management team to explore opportunities for new products and services that might be enabled by this data. The Applied Analytics team selected Unai to support them in the first phase of this strategic initiative, with a focus on the discovery and prototyping of new, data-driven products.

Unai took the view that the key to identifying commercial opportunity lay in the fact that DST’s view of transactions across a substantial portion of the UK market was unique. The team started thinking about analytical products which exploited this fact. To generate ideas the combined team initiated a discovery process to understand key needs and challenges faces by two client segments: the Fund Manager and the Head of Sales.

What Unai Delivered

  • Market Trends Model. Unai developed a statistical model capable of teasing out the key factors which drove investor behaviour into certain classes of fund and out of others, and how these factors were changing over time. The model was designed to inform critical decisions that fund managers needed to make around the design and remit of new funds.

  • Churn Model. When major shareholders sell a fund it affects both the fund's liquidity position and the returns it can generate. The Heads of Sales wanted to proactively contact shareholders who might soon sell their holdings. Unai delivered a propensity-to-churn model which produced shortlists of customers to contact.

  • Forecasting Model. Fund Managers need to balance the quantity of cash they retain: too little and they must sell holdings when investors trade out; too much and they miss out on returns. Exploratory analysis indicated that investor behaviours showed certain predictable patterns. Unai exploited these in a forecasting model that accurately predicted the quantity of cash required over the next month.

The Result

The combined team fine-tuned and productionised them models before integrating them into a demonstration application. This application was made available to DST Systems' client facing teams.

The team collected early feedback (which also yielded a host of new ideas) and were able to refine the prototypes off the back. Given the simplicity of the modelling techniques used, DST Systems' Platforms team were able to start planning the development and integration of these new features into their product roadmap.

It was a pleasure working with the Unai team. What sets them aside from many analytics professionals is their ability to understand a business and its stakeholders, and to get to the heart of their problems and needs.

We engaged Unai on a short project but go a tremendous amount done, setting our Platforms Team up well for the road ahead.

Ruaraidh Thomas, Managing Director, DST Applied Analytics