Northern Trust Front Office Solutions to expand outside the US

Northern Trust will expand Front Office Solutions outside of North America as growth has already exceeded expectations this year and the company has completed the acquisition of Parilux Investment Technology.

Front Office Solution provides technology to in-house investment teams for large endowments, foundations, sovereign wealth funds, pensions, insurance and multi-family offices. These in-house investment teams traditionally had to use separate systems for each asset class.

Melanie Pickett, head of front office solutions at Northern Trust, told Markets Media that there was a significant technology gap for asset owners and that the firm benefits from partnering with clients that allows it to provide operational expertise and an understanding of asset classes.

Melanie Pickett, Northern Trust

“For example, when we recently rolled out a new liquidity module, we spoke to investment managers on our platform about how they wanted to interact with data and we will continue to iterate through our process to ensure that our tool is suitable for their purpose,” she added.

Pickett continued that there had been a slowdown last year in clients’ decision-making as they were hesitant to embark on a new project or a big transition in their office. However, there was an increase in demand in the first quarter of this year.

“We are delighted with our growth over the past year and this year’s growth is already far exceeding expectations,” she said. “So the momentum is strong and the race is on to address this underserved need.”

She added that Front Office Solutions currently covers North America but has has just created a team in Limerick, Ireland. “Our goal is to become available overseas within the next year,” Pickett said.

Acquisition of Parilux

Northern Trust has completed its acquisition of Parilux Investment Technology, completing an investment that began in 2018.

“At the start of the relationship, it was important to ensure that the technology would meet the needs of our customers in the way we hoped,” added Pickett. “We could test if this was the right partnership before taking the plunge and buying the whole company.”

She went on to say that Parilux has built an application over the past decade which is the core data model and analysis offered to clients.

Mark D’Andrea, Managing Partner and Managing Director of Parilux, said in a statement: “It has been rewarding to work towards shared technology goals and meet the needs of asset owners through robust analytics, client reporting , data visualizations and a full service global Solution.”

Front Office Solutions integrates Parilux software with a proprietary cloud-based web and mobile interface.

“We were able to take what they built and turn it into a modern, user-friendly suite of interactive data visualizations and pair it with the operational services that customers were looking for,” Pickett said.

Data request

Pickkett continued that customer appetite for all types of data is increasing every day on an upward trajectory.

“This has increased the creativity they try to apply to their portfolio to find investment opportunities, which also leads to an increased need for tools for analysis, scenario planning and stress testing,” said she added.

Environmental, social and governance data is a priority for clients and Pickett said Northern Trust has already done significant work for marketable securities.

“In private markets, the data sources and the way people think about ESG are very varied, so we are aggressively trying to meet the needs of our clients by bringing together multiple sources of ESG data for private and public assets” , she added.

Northern Trust aims to help its clients become more effective in their decision-making by harnessing unstructured information and putting it into an accessible format for analysts and portfolio managers.

“We are nearing the end of the first year of a multi-year investment in a machine learning and digitization strategy for alternatives that focuses on automating everything from document capture to automatic asset extraction. underlyings and performance metrics,” Pickett said.

She explained that customers have spent tens of millions of dollars to get the best systems for public markets and for private markets. Northern Trust can replace the need for them to create data warehouses and enterprise service layers between these applications. As a result, investment managers can get answers to very basic questions about exposure or risk to meet the exact needs of their investment process without having to integrate multiple systems.

“We’ve built the most useful container, features, and functions for our customers, but there’s an insatiable appetite for more data,” Pickett added. “So this year will be about integrating data and identifying partners in the technology ecosystem to improve the apps we’ve built.”

New services

Front Office Solutions has also launched an initiative to integrate its platform with other internal Northern Trust tools, which will help organizations that have both large internal dealing teams and external manager allocations to alternatives.

“This combined capability is a market differentiator, as clients will benefit from an integrated data model that supports risk, performance, exposure and liquidity analysis across all their portfolios,” said said Pickett.

Additionally, there has been an increase in demand for Front Office Solutions’ operational risk management solutions, as clients still do not deal with managers in person. They had to perform due diligence remotely as they sought to make new allocations and investments with managers they may never have met in person.

Northern Trust Front Office Solutions has announced the launch of Operational Risk Consulting, a bespoke service which provides management advice with a particular focus on investment operations.

Vincent Molino, Head of Operational Risk Management Solutions at Northern Trust, said in a statement: “Looking into 2021, many investment organizations realize that their operating models will need to evolve to meet the expectations of key stakeholders such as as investors or beneficiaries, business partners. , investment consultants and governance bodies.

Pickett continued that there is also a lot of interest in tools that can analyze the persistence and skill of investment managers, as asset owners want to ensure they are invested with managers who have repeatable and durable frameworks.

“We help clients create custom frameworks for due diligence and the data elements they specifically want to track and allowing them to automatically bring in all associated documentation,” she added. “These tools have become even more critical due to the impact of working from home or in a more hybrid way.”