Fund administrators redesign operating models with automation

According to Achim Denkel, managing director for Europe at Formidium, fund administrators must redesign operating models and deploy integrated automation to address fee compression, rising regulatory demands and a shortage of experienced operations staff.

Denkel notes that over the past decade many fund managers digitised workflows, outsourced administration and added reporting tools. Despite those changes, operations teams still spend substantial time moving data between systems, reconciling information and preparing reports.

He identifies three structural trends across Europe. Management fees are under pressure while investor reporting expectations are increasing. Regulatory obligations have expanded, with measures such as AIFMD II and new rules for digital assets raising compliance work. Experienced operations professionals are more difficult to recruit and increasingly expect technology to remove repetitive administrative tasks.

Denkel argues that adding headcount is not a sustainable response. Managers now handle more complex fund structures and larger reporting loads that require consistent, transparent and auditable processes. He says compliance must be embedded in daily operations rather than treated as a separate function.

Formidium’s approach centres on integrated workflows rather than automating isolated tasks. Denkel describes artificial intelligence as a way to change how skilled staff spend their time, assigning routine processes to automation while routing exceptions and judgement to experienced personnel.

He points to the past year as an example, saying firms with more automated operating environments maintained reporting quality and reacted faster to market moves. Denkel described the goal as: “The objective should never be full automation for its own sake. The objective should be intelligent automation that handles routine processes while directing experienced professionals towards exceptions, judgement and client interaction.”

Looking ahead, Denkel expects administrators that combine technology, operational expertise and regulatory knowledge within a single operating model to deliver faster decisions, higher-quality data, lower operational risk and greater scalability. He adds that clients should notice those outcomes rather than the automation itself.

Denkel frames the next phase of the industry as an operating-model redesign that integrates automation with human oversight to meet cost constraints, regulatory requirements and workforce expectations.