Building agile, scalable and transparent operations to reconcile on T and handle surging AUM

Global Alternative Investment Manager

“The ability to continually check data throughout the day has been a godsend to me as a manager. It’s allowed me to have oversight on processes I previously had no control over and ensure their integrity. Duco enables me to check multiple times per day, quickly and easily. That we’re able to do this at all is priceless.”

The customer had recently undergone a strong period of expansion, with assets under management doubling through a combination of organic growth and M&A. This outpaced even the market-leading rate of growth seen by alternative assets compared to more traditional AMs.

But third-party systems and an unworkable in-house reconciliation solution meant that it was challenging to check the accuracy of data entering the firm’s trading system. So the customer turned to Duco in order to:

  • Empower end-users to build reconciliations themselves
  • Automate intraday data quality checks for third-party fund administrators
  • Create transparency over fund performance and reduce risk
  • Build scalable operations to mitigate potential backlogs from AUM growth

The problem: opaque third-party data and user-unfriendly tools

The customer has a complex network of third-party fund administrators to manage, all sending data that could override the firm’s internal trading system. The team had no way to check the accuracy of this data, meaning they would end each day unsure if all the necessary controls were fully in place.

Additionally, the firm’s in-house reconciliation tool was so technical that only IT could use it, even after some of the operations team had been given weeks of dedicated training by the vendor.

“Our previous tool was very intricate and only our IT teams could actually get a recon done. It would take two sprints, and I can’t do that. I need the flexibility to make changes to a reconciliation. I need to be able to do that on the fly, not stuck in a queue.”

Why Duco?

The customer had received a glowing recommendation from another customer. The fact that users could easily build their own recs made the platform stand out.

During the demo the customer saw how our agile platform was able to adapt to all the use cases required of it, thanks to its flexible data ingestion, intuitive interface and no-code functionality. Our Natural Rule Language allows non-technical users who understand basic English to build data transformation rules using dropdown menus. It removes all need for business requirements documents, development work and lengthy implementation and testing cycles.

It wasn’t hard to convince the business that Duco was the right tool. As well as operations staff, the IT team instantly saw the potential of a tool that empowered the end users to build reconciliations themselves to free up their own resources.

The outcome: instant access to scalable, governable, transparent operations

AUM doubled in 2021, while the number of flagship funds valued at over $1 billion grew from five to 24. This equated to around a 45% increase in volume for the team to process. But thanks to Duco, this was easily achievable.

“The same two people who handled our reconciliations when our AUM was $150 million are still doing it all today at $300 million.”

Day one support for new acquisitions

A large part of the customer’s growth is due to acquisitions. Sometimes a newly-acquired company doesn’t have the same tools as the customer, but want to get onboard very quickly.

Usually that takes time and manpower, but not with Duco. The platform is so easy to use that one of the team at the customer is able to walk new staff through building their first rec and then leave them to it.

“When we acquire another fund manager, business is active and capital is deployed. We’ve got to be able to support them from day one. Thanks to Duco’s ease-of-use, our team can give new staff a few training sessions and then they’re running and building recs themselves. Onboarding new funds doesn’t require us to take on any more work.”

From impossible recs to automated checks

The speed and ease of the Duco platform enables the customer to run multiple reconciliations on T to identify errors and have the third-party administrators fix them ready for sign-off at the end of the day. Data is delivered via SFTP and the reconciliations run automatically once both sides reach the server.

Accurate data supports trading, minimises risk and improves customer experience

The greater transparency and data quality the customer has been able to achieve using Duco has supported the firm’s portfolio managers and traders, while enabling the firm to offer an even better experience to its customers.

The fund admin data reconciled daily feeds the firm’s trading system, which contains customer portfolio positions. Portfolio managers and traders rely on the accuracy of this data to ensure they don’t over or undersell, protecting profit and loss and avoiding risk to the firm’s reputation.

Additionally, the data goes into the firm’s data warehouse, which is used to inform client reporting, ensuring that the firm’s updates to their clients are as accurate and timely as possible.

“Our portfolio managers and traders rely on the data in our trading system to know what each portfolio owns and how much they have to trade or vote on corporate actions. If those positions are wrong, they could over or under sell and that can have P/L implications, along with reputational risk.”