External Service Provider Management: More than just outsourcing and monitoring services
External service providers play a central role in the asset management industry. However, involving them calls for far more than just traditional outsourcing and monitoring. Effective external service provider management not only optimises efficiency and costs, but also ensures compliance, security and quality. As a result, a structured and strategic approach is essential to meet growing regulatory requirements and technological developments.
(Author: Martin Müller, Associate Director Business Development & CRM)
The regulatory requirements for investment managers and service providers in the asset management industry have increased considerably in recent years. At the same time, growing competitive pressure calls for greater efficiency and specialisation. External service providers can offer valuable support here. This can range from administrative back-office functions and IT security solutions to risk assessment and regulatory reporting.
There are several key aspects of effective external service provider management, including: strategic selection of service providers, drafting of service level agreements (SLAs), integration of new technologies, development of long-term partnerships, cost efficiency, regulatory compliance and risk management.
A Complex Ecosystem: Private Labelling
Cybernetic principles can help establish external service provider management that is both dynamic and flexible while remaining controlled. Cybernetics deals with the control, regulation and feedback of complex systems. This approach can be ideally transferred to the Solutions & Funds Open Architecture platform.
Within the context of ESPM, cybernetic principles help develop efficient control mechanisms for external service providers. Structured and adaptive management ensures a smooth value chain, while at the same time leaving enough flexibility for market changes and regulatory adjustments.
In short, External Service Provider Management is much more than just outsourcing or monitoring business partners. Within the asset management industry, companies need to find a balance between increasing efficiency, risk control and regulatory compliance. A strategic approach creates long-term benefits for all parties involved. The key to success lies in a structured and proactive ESPM approach that combines safety, quality and innovation.
While ESPM comprises the overarching strategy for selecting, integrating and managing external partners, Outsourcing and Monitoring focuses on the operational application and monitoring of outsourced processes. The full potential of external partnerships can only be realised if both sectors are closely interlinked for successful long-term operations.
Sabine Koch as new expert for Outsourcing & Monitoring
For this reason, Solutions & Funds (S&F) has strengthened its team with Sabine Koch as Head of Outsourcing Monitoring. In her newly-created role, Sabine Koch will be responsible for strategic partnerships with custodian banks and administrators. This will ensure the smooth operation of S&F's Open Architecture platform.
With more than 30 years of experience in the investment fund sector, Sabine Koch brings in-depth expertise and valuable industry insights. During her career, she has held management positions at various fund management companies in German-speaking Switzerland. She has also acquired extensive knowledge in the fund operations for liquid and illiquid fund structures sector. Furthermore, as a specialist in fund administration and operations, she was responsible for the management of fund structures in various jurisdictions. She also gained valuable experience in various roles in the fund controlling sector.
Thanks to her many years of experience, Sabine Koch combines in-depth specialist knowledge with practical experience and strategic vision – a combination that makes her a sought-after expert in the investment fund industry.
In the newly-created ‘Head of Outsourcing Monitoring’ position, Sabine Koch will take on central tasks to optimise efficiency, compliance and risk management:
- Central point of contact for outsourcing monitoring: To improve information flow, a central point of contact and escalation will be set up for cooperation with administrators and custodian banks. Among other things, a central point of contact ensures that all external and internal stakeholders know who to contact for questions or escalations. This avoids misunderstandings, reduces duplicate processing and creates better process traceability, as all requests can be documented and tracked.
- Strategic development of service provider relationships: Further development of existing and establishment of new strategic partnerships, such as the integration of a new custodian bank.
- Standardisation & increased efficiency: Process standardisation and identification of efficiency potential to optimise cooperation between different service providers.
- Review and further development of operating memorandums & KPI reporting: Ensuring transparent and measurable performance monitoring through clearly-defined service level agreements and a KPI dashboard for measuring predefined service targets.
- Coordination with auditors: Taking over the strategic coordination with auditors to ensure an efficient audit process. Thanks to efficient cooperation with the auditor, annual financial statements can be implemented faster and more smoothly, meaning less effort for customers.
- Development of structured data management: First steps towards implementing a standardised data management system with the integration of relevant data provider platforms. A corresponding data warehouse allows for more efficient provision of fund data and reduces manual reconciliations.
These tasks play a key role in taking ESPM at Solutions & Funds to a new level.
Open Architecture Platform
The Solutions & Funds Open Architecture platform enables PLF clients to select first-class service providers for their fund projects. Targeted adaptation to individual requirements creates an optimal set-up that utilises synergies from existing partnerships and successfully implemented projects. This leads to maximum efficiency, flexibility and seamless implementation.
Instead of isolated outsourcing solutions, the result is an integrated network of specialised partners who work together to increase operational efficiency, meet regulatory requirements and create added value for asset managers, banks, insurance companies, pension funds and family offices.
A well-orchestrated service provider ecosystem can secure competitive advantages and open up sustainable growth potential. S&F assumes the role here as a single point of entry. As an experienced fund management company, Solutions & Funds provides access to various forms of fund law and offers its clients comprehensive structuring and advisory services. Thanks to our experts' in-depth technical and regulatory knowledge, as well as strong relationships with authorities, interest groups and other market players, we guarantee clients tailor-made solutions for their private labelling fund project.