Navigating compliance — On-premise vs. SaaS solutions for asset managers
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Ali Curi: Markets ConversatION is an ION podcast where we discuss topics of importance to capital market participants with product owners, subject matter experts, and industry leaders. 

Tim Flinders: Bad actors are everywhere and inside those walls, we now need to have data encrypted everywhere, and titling that data so you know who can see it.

SaaS delivers at scale to mitigate those same risks across multiple clients, we deliver updates every week and the infrastructure is updated across all of those clients. We employ multiple layers of monitoring and security, and that can be quite challenging for our on premise clients to do themselves.

Ali Curi: Hi everyone, and welcome to Markets ConversatION. I'm Ali Curi. On today's episode, Steven Strange and Tim Flinders from ION Markets will discuss the critical choice asset managers face between on premises and software as a service, or SaaS solutions for compliance management. In today's regulatory landscape, selecting the right technology is vital for ensuring compliance and operational efficiency.

We'll dive into the benefits and challenges of both options, covering aspects like customization, security, scalability, flexibility, and cost effectiveness. Join us as we discuss the key considerations for asset managers, including regulatory requirements and internal IT capabilities to make an informed decision.

Whether you're a small firm aiming to scale, or a large organization prioritizing robust security measures, this episode offers valuable insights to enhance your compliance strategy.

Let's get started. 

Steven Strange, welcome back to the podcast. 

Steven Strange: Great. It's great to be here. 

Tim Flinders: And joining us for the first time to the podcast, Tim Flinders.

Ali Curi: Hi, Tim. Welcome. 

Tim Flinders: Hi, Ali. Thank you. Thank you for inviting me. 

Ali Curi: We're glad you're here. Steven, you're regular on the podcast, but for our new listeners, can you briefly share with us your background and your role at ION? 

Steven Strange: Yeah, of course. So I head product management for the asset management part of ION Markets. So I'm focused on buy side community, front office technology, been working in this industry for just over 15 years. 

Ali Curi: Thanks Steven, and Tim, please tell us about your background and your role at ION. 

Tim Flinders: Yeah, I'm based in London. I lead the technology and operations functions or asset management group with ION Markets.

I've been working about 25 years experience, but a good 13-14 is just on asset managers. 

Ali Curi: Great. Thanks, Tim. 

Steve. So why is compliance management so critical for asset managers, other than it's mandated? 

Steven Strange: So when you think of investment compliance, asset managers are looking after other people's money.

So they mandate them to say, well, these are the restrictions you must have when you're going to manage my money. So it's important for them to have strict controls say, "Well, I can't be exposed to a certain exposure limits. I can't trade a certain security." All of that types of stuff. So you need to have an automated platform in place to be able to have those controls.

Ali Curi: And Steven, to add what you just outlined, share with us some background on why we're discussing the topic of on premise versus software as a service or SaaS. 

Steven Strange: Well, when you consider technology platforms, it's always important to think about who it is for and who are the stakeholders and what advantages it can bring.

So you have compliance leaders, investment professionals, technology managers, they all play a vital role. So you need to consider, well, if I'm a smaller firm, should I have a SaaS platform in place? Should I have on premise? And then really consider the debate, which is best for you. 

Ali Curi: Tim, let's come over to you for a minute.

What are some pros and cons to on premise versus SaaS compliant solutions, particularly in terms of control and customization? 

Tim Flinders: Yeah, asset managers have a lot of complex systems driving from the front office to the back office. On premise systems often means that customization is a lot easier and can be more bespoke and integration might be more tightly coupled, especially if it's between different vendors.

The downside is those who owns those connections, and especially if anything goes wrong. On premise, the IT team also has control of updating those environments and sticking to their own firm's controls. But that sometimes, has the downside of upgrades may take a long time to take place, whereas the advantage of SaaS is that often the service is updated to the latest or greatest all the time.

And it also means integration is often through open APIs, rather than anything direct and often SaaS means that we're monitoring those connections more detailedly and it can deal with things before they go wrong.

ION Ad: This episode is brought to you by ION. At ION, our asset management solutions automate your compliance, order management, and trade processing with customizable technology that grows with your business. Gain real-time insights for fast, accurate decisions, all while reducing costs and enhancing security with ION Cloud hosting. To learn more, visit us at iongroup.com/markets or email us at: markets@iongroup.com. 

Ali Curi: Well, as we know, security is of utmost importance to firms. So how do on premise solutions stack up to SaaS solutions? What are the potential risks involved on each side? 

Tim Flinders: So I think security is one of those universal things. It doesn't matter where you're running the systems, it needs to be the utmost importance. The thing is that is continually changing, attacks are coming from all kinds of angles, and it can be quite challenging on premise to keep up with the various attacks that can take place. But often this is about a physical location.

And security, historically, has been putting up a wall, we talk about being put behind a firewall, but the concept of that wall is often not getting thick enough or tall enough anymore. So, and we're working in multiple locations and obviously there's a lot more remote working there's ever been before.

Bad actors are everywhere and inside those walls, we now need to have data encrypted everywhere, whether it's on the move or stationary and titling that data so you know who can see it. SaaS delivers at scale to mitigate those same risks across multiple clients. We deliver updates every week and the infrastructure is updated across all of those clients.

We employ multiple layers of monitoring and security, and that can be quite challenging for our on premise clients to do themselves. 

Ali Curi: Tim, let's dig a little deeper into SaaS solutions. One of the key benefits of SaaS solutions is their scalability and flexibility. Can you elaborate on how this can benefit asset managers?

Tim Flinders: Yeah, SaaS deployments often can leverage active scaling and high availability across different data centers. One of those things we're able to do with SaaS solutions is actively scale. So if we monitor the usage or we know an event is going to take place, say a batch process is going to run at a particular time every day, we can scale that system up to hit maybe a target completion time, and then scale it back down. The key thing with SaaS systems is we monitor everything, and that allows us to improve the infrastructure and the software. And I guess I can borrow from an analogy from motor racing, "We want to know the tire is going to blow and replace it before it actually blows." And, when it comes to flexibility, clients benefit from those regular updates, and in many cases, that's a result of client consultation and wanting new features. So that means flexibility at scale, and everything is automated and therefore documented. 

Ali Curi: Those are some great benefits. But Tim, how do regulatory requirements influence the decision between on premise, and SaaS solutions. Are there any specific compliance needs that one solution meets better than the other?

Tim Flinders: Yeah. So regulatory requirements can often heavily influence the choice between on premise and SaaS solutions. On premise solutions often appeal to those firms that have strict data sovereignty rules, where they want full control over the data and security, which might be critical for meeting those local compliance requirements.

However, SaaS solutions often excel at keeping up with evolving regulations through automatic updates and built in compliance features. That reduces the manual effort needed to stay compliant and firms operating across multiple jurisdictions often find SaaS is more flexible. 

Ali Curi: And Tim, one more follow up.

How do on premise and SaaS solutions impact differently the day-to-day operations of an asset management firm? 

Tim Flinders: On premise solutions require more hands on management with IT teams responsible for the maintenance updates and the security of the systems. And on the plus side, that offers some greater control and customization, but that comes at a cost of added complexity and resource demands on them.

Retaining that customization knowledge in a firm can be challenging. We often have seen institution knowledge loss over the years, and it's been more of a problem within firms. With SaaS solutions, on the other hand, streamlining those day-to day-operations, we offer automatic updates [and are] accessible from anywhere and scalability, as I spoke before on, as the need requires.

This allows firms to focus on what is important to them, the investment strategies and working with their clients. 

Ali Curi: Okay, great. Thank you. Steven, let's give Tim a break. Here's a question for you on initial setup costs and data security. Steven, will you elaborate on the challenges and considerations that asset managers should consider when they're evaluating these two compliance solutions when it comes to setup costs and data security?

Like what should they keep in mind? 

Steven Strange: Yeah, absolutely. So this goes back to my earlier point. It's all about the business and stakeholder needs. If you're a smaller firm who's growing into new markets, new jurisdictions, you're going to need a solution that can grow with you. Setup costs need to be minimal so you can focus on your high value tasks and take advantage of SaaS platforms.

Data security, as Tim mentioned, it's always important and it's actually important regardless of what delivery model that you put in place. But if you are looking at a SaaS model, you do need to speak to your vendors. You do need to do your due diligence. And you need to understand, do they offer the security standards? Do they have enough encryption in place? 

Ali Curi: For those on the SaaS camp, we often hear about "future proofing" with SaaS. What does that mean exactly? And why is it important for asset managers? 

Steven Strange: What really means you need to find a solution that meets both your needs today and your projected growth and your plans.

So as you start to trade into different jurisdictions, that means you need to understand those different regulations. So your compliance system needs to be up to date very quickly. So it needs to grow with you. As your trade volumes grow, you need scalability. As you look to seek alpha, maybe you want to trade a different asset class.

Therefore, you need a SaaS solution that provides this flexibility through optional modules that you can turn on and off as you grow. It needs to scale with your performance, your growth plans, and so you really need to align your strategy with them, the future proofing of a SaaS platform. 

Ali Curi: Now I want to hear both your takes on the following question.

What's the one big thing you hope listeners would take away from this episode? Steven, let's start with you. 

Steven Strange: As an asset manager, it's all about your strategy, your and your objectives. So I think you really need to understand what technology option suits you, as I mentioned, for your growth and more importantly, for your stakeholders.

If it's the compliance professionals, if it's the investment professionals, if it's the technology managers, they all have different needs. You need to evaluate them and you need to assess what the best solution is for you. 

Tim Flinders: Tim, what are your thoughts? 

I think you need to consider which solution you go for that will adapt to your business the most.

And you don't know what's going to be down the road and you need to plan for change, even though that might not be planned for. And often that might mean looking at SaaS providers where you are actually able to adapt to that change more quickly because they can deploy solutions more often.

Ali Curi: Steven, I've asked you about career advice in previous episodes. My question for you today is, how do you stay motivated and inspired in your work? 

Steven Strange: Well, the asset management environment is always changing. Markets are volatile, there's political events. And what that means is there's new problems every day to solve.

So as a product manager, that's very motivating to work with the investment community, to see what their challenges are, how we can increase their productivity and solve their problems. 

Ali Curi: And Tim, same question. How do you stay motivated and inspired in your work? 

Tim Flinders: My biggest motivation is seeing our software being used at asset managers.

If you think we take a product idea and we work through it in technical solutions, test it, deliver it. But when you speak to a firm and take that idea and hear how that's increased efficiency, maybe it saves them money or do something they couldn't do before, that's extremely motivating and something I do encourage everyone to do, especially knowing what the end result was.

Often with technical staff, they're disconnected from the business. And at the end of the day, the business results are the things that matter. 

Ali Curi: Well, I think that's some great advice to close our episode with. Steven Strange, Tim Flinders. Thank you both for joining us on the podcast. I look forward to our next time.

Steven Strange: Thanks, Ali. 

Tim Flinders: Thanks, Ali. 

Ali Curi: And that's our episode for today. You can follow ION Markets on X and on LinkedIn. Thank you for joining us.