FTF News interviews Kate Maryniak at Confluence Technologies about the need for innovation in performance measurement, analytics, digital reporting, and more.
Kate Maryniak
(Confluence Technologies, a solutions provider for investment management firms, is no stranger the strong currents of change that ripple through the financial technology industry. Just last month, Confluence, backed by Clearlake Capital and TA Associates, acquired Compliance Solutions Strategies (CSS), a cloud-based regtech solutions vendor, and Investment Metrics, a provider of investment data, performance, analytics, and research software solutions. Two years before, Confluence created its own ripples by acquiring StatPro. FTF News got time with Kate Maryniak, head of product management for Revolution at Confluence; the Revolution offering won the FTF Award for Best Performance Measurement System of 2020. Maryniak, who originally joined StatPro in 2001, has served in many client-facing roles the help deliver risk, performance, and fixed income attribution solutions to customers. She now oversees product managers who are responsible for the performance, risk, and reporting offerings within the Revolution platform. Before Confluence, Maryniak was managing middle-office operations for the Credit Suisse Asset Management branch in Warsaw.)
Q: How do you see the role of a financial technology provider changing given the many needs of the client and a swiftly changing landscape?
A: The fintech providers will continue to drive innovation in the financial industry and the industry will likely see more partnerships between fintech and big banking or other financial groups to create data, analytics, digital reporting, and distribution platforms.
It already is and will continue to be a truly transformative journey for the industry, in some ways accelerated by the lessons learned from the COVID-19 pandemic. We anticipate that in response to evolving client needs the fintech firms will have to try to stay a step ahead and work out new ways in which technology can help meet the business goals of their clients.
Fintech firms will have to turn their focus and attention to delivering a great user experience via well-thought-out solution designs, process and service automation, and increasing the interoperability aspect of their solutions by providing customers with access to APIs [application programming interfaces] that in turn will facilitate a flow of data and analytics among various platforms in clients’ investment ecosystems.
Q: Asset owners, asset managers, and asset service providers have many needs and Confluence serves each group differently. Why take that approach rather than a “one size fits all” strategy?
A: The way we approach expanding our Revolution platform with new features and functionality is very much driven by direct client feedback and their requirements, and these can differ among asset owners, asset managers, or asset servicers.
We believe that the future product strategy needs to be set in collaboration with our client partners, to who we provide services, and this motivates us to commit time and effort to develop a deeper understanding of what each client segment’s needs are and how we can best fulfill them.
There are some common areas of interest among different client types like operational workflows or access to flexible solutions allowing fast extraction of analytics (for example via bulk export or programmatically via APIs).
Even though each client type may have slightly different needs and expectations regarding the performance measurement system like Revolution, they all want the solution to be scalable for future growth, producing accurate performance numbers, and equipped with advanced attribution models.
Q: Why do clients need more customization support from third-party providers when it comes to fixed income attribution and analytics?
A: We can safely say that the value of any attribution model is measured by how well it can explain the underlying investment process and whether it can correctly identify the sources of an instrument’s risk and return. This (attribution) task alone can get very complicated quickly considering the sheer volume of various fixed income strategies currently deployed across investment portfolios globally.
Various portfolio managers can have different views on how return drivers such as carry (passage of time), yield (interest rate movements), and credit spread contribute to the overall instrument’s return, depending on its asset type and the role it plays in the portfolio. Hence the need for a much greater level of customization when it comes to managing input data and computation of fixed income performance and attribution analysis.
Just to mention a few examples; the risk service, integrated with Revolution can provide risk analytics based on the client’s custom price of the underlying instrument. Clients can further define custom hierarchies according to their risk analytics source preference on a per portfolio basis.
Revolution can provide the capability for a user to make their own adjustment to the fixed income decomposition model for any relevant pricing function, and a similar approach can also be applied to the management and possible reassignment of the model residual (i.e., the residual assignment can be done at the pricing function or even at the individual instrument’s level).
We expect to see more requests from clients to provide an even greater degree of flexibility and customization when it comes to the derivation, computation, and aggregation of fixed income attribution analytics in the future.
Q: What kinds of customer care does Confluence provide for the performance measurement and analysis of fixed income instruments and portfolios?
A: Confluence (formerly StatPro) has been offering fixed income attribution solutions to its asset management customers for well over 14 years now. Fixed income analytics can be a particularly challenging and demanding area for a vendor to provide quality implementation and ongoing customer support services.
Our success in this area can be attributed to the skill and expertise of various teams involved in supporting fixed income analytics on the Revolution platform such as implementation consultants, product, data management, quant, and development teams.
It is important to mention that although the Revolution platform computes fixed income analytics with the use of a very robust data service, we also support the use of client custom data (e.g. yield curves or duration, yield analytics).
Customer care starts early on in the onboarding process where we guide and advise a new client regarding the required data feeds and asset coverage. Setting up the correct data feed and workflow for the portfolios, benchmarks and risk analytics will drive the richness and quality of performance and attribution results for various fixed income strategies.
Asset coverage is another complex process that makes the implementation of fixed income analytics much more challenging and requires ongoing vendor support for as long as the client is using the platform. What we mean by asset coverage is the process of mapping the client instrument code to a recognized market identifier or mapping the instrument’s terms and conditions to a pricing function (pricing model) in case of, for example, complex OTC [over-the-counter] derivatives.
The fixed income return decomposition heavily depends on the system knowing each asset type the pricing model needs to apply to.
Talking about attribution models, we work very closely with our Revolution platform users to help them understand the required portfolio analysis configuration to best explain the underlying investment process and thus provide value-add to the portfolio managers and ultimately their end customer.
Troubleshooting the analysis results is yet another example where clients seek assistance from Confluence.
BAU [business as usual] process automation, fine-tuning the client reporting generation or fixed income analytics extraction via bulk exports or APIs are other important areas where Confluence can provide expertise and support.
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