Accelex and FactSet have published a new research report that reveals how the rapid growth of private markets is intensifying data challenges for fund administrators.
The report, entitled Unlocking Operational Excellence in Fund Administration through AI, is based on insights from in-depth interviews with senior executives across 16 leading fund administration firms, collectively managing over USD13 trillion in assets under administration and employing more than 53,000 professionals worldwide.
The results showcase that 55 per cent of fund administrators consider data acquisition and data governance their primary operational challenge, expressing significant concerns about data availability, accuracy, and timeliness. The biggest trend compounding this challenge is the growth of private markets, driven by the inclusion of retail investors and the growth of private credit. These trends have increased data volume, complexity, and reporting demands.
To solve the issue, 25 per cent of fund administrators are focusing on process automation. However, these efforts are falling short due to poor underlying data quality issues and expedited flawed processes. Only a small fraction (11 per cent) is focused on improving data quality and governance, despite their direct impact on reporting accuracy and timeliness.
Looking ahead, fund administrators are increasingly embracing AI, with some respondents reporting that AI technology has reduced data processing times by up to 80 per cent while achieving near-perfect accuracy.
Other key findings from the research include:
Private markets talent shortage – Nearly one-fifth (17 per cent) of fund administrators struggle with HR challenges due to the scarcity of specialised skills, a lack of long-term incentives, and fatigue due to manual processes.
Reliance on fragmented systems – On average, large fund administrators use six different core systems, leading to increased operational costs and cybersecurity risks.
Rising client expectations – Fund administrators’ clients prioritize quality service, operational excellence, and reporting and regulatory compliance when it comes to provider selection.
Michael Aldridge, President and CRO of Accelex, says: “The fund administration industry is at a pivotal moment, where balancing operational efficiency with exceptional service quality has never been more critical. As private markets expand and regulatory demands rise, administrators face mounting challenges in data governance, a cornerstone of compliance, scalability, and client reporting. By streamlining workflows, enhancing accountability and meeting complex regulatory requirements, AI-driven data governance empowers administrators to build trust, foster transparency, and position themselves as leaders.”
David Mellars, Senior Vice President and Senior Director of Buy-Side Middle Office Product Management at FactSet, says: “Private markets’ rapid growth has fundamentally reshaped the demands of the buy-side, including fund administrators, driving a need for more timely and accurate data. Better tools will help all market participants overcome data quality challenges, reduce inefficiencies, and meet rising client expectations with precision and confidence.”
Read the full report here: https://www.accelextech.com/lp/unlocking-operational-excellence-in-fund-administration-through-ai
