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Report exposes private capital funds ‘ad hoc’ tech strategy

Private capitalPrivate capital funds are guilty of an ad hoc approach to adopting new technology that is now causing them a range of operational problems, suggests a recently published report.

The research commissioned by specialist fund administrator found that almost half (48%) of private capital firms believe that their reticent approach to new tech such as the blockchain and AI has created challenges in cybersecurity, poor quality data and higher operating costs.

The study, Introducing the Halo Framework, interviewed 150 “senior decision-makers” at private capital firms.

Just 6% of the participants said they had developed what they consider to be a “mature tech platform incorporating next-generation technology across the firm”.

The biggest obstacle to adoption is the war for tech talent, as cited by 64%, while more than half (53%) said that the inability to consolidate data across multiple sources was creating data management problems.

These challenges also mean it is unlikely private capital firms will look to build or adopt any tech in-house. Instead, we are likely to see greater outsourcing to third parties and vendors, as stated by 58% of respondents.

“By their own admission, most private capital GPs have been slow to fully embrace and invest in new technologies to improve their operating models,” said Chitra Baskar, president, fund solutions, Intertrust Group.

“As private capital firms progressively look to upgrade, update or modernise their operating model, they are increasingly looking for trusted third-party vendors and partners that can provide established platforms and solutions to support their technology needs.”

© 2022 fundsTech

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