Rapidly Delivering a Transparent and Automated Fund Administration Platform
Private market investment funds have nearly doubled in size over the last decade, ballooning to $12 trillion in assets as of 2023.
As a result, there is an increased demand for fund administrators – the third-party organizations that execute a fund’s business-critical processes such as accounting, reporting, and capital events.
In the private market space, there is no singular way of managing investment funds, which can vary greatly depending on the size of the firm, its strategy, and asset classes. “It’s a bespoke part of the business,” said Aisling Hayes, Head of Fund Accounting at Alchelyst. “Each client has unique requirements and historically this has been very challenging to automate.”
Founded in Dublin in early 2023, Alchelyst’s unique blend of technology and talent are on a mission to disrupt the private markets administration space. Since adopting Mendix in July 2023 Alchelyst has accelerated the launch of their digital fund administration solutions which are, in turn, increasing efficiency for their clients.
A Low-Code Foundation for Growth
The investment industry tends to go through cyclical phases, says Charles Gillanders, Alchelyst’s Chief Information Officer.
“The market has been consolidating for several years. The largest players are absorbing other firms and prioritizing service based on revenue and profitability. Those who don’t meet their thresholds often receive subpar service,” he said.
These under-serviced funds can fall behind their much larger competitors in terms of efficiency, as they are often:
- Reliant on manual work to execute day-to-day processes.
- Managing landscapes of disparate data sources with little to no transparency.
- Lacking the resources to develop solutions to meet their unique business needs.
“Consolidation among service providers has caused a rush towards large-scale integration instead of innovative projects,” explained Gillanders. During this time, Alchelyst has remained dedicated to developing an enterprise-grade technology solution to address this gap.
Alchelyst’s founders had a clear vision for their core third party technology partners, and sought out the most efficient technologies on the market to develop their proprietary solutions.
The Alchelyst team quickly concluded that a low-code or no code platform could meet their needs and began an evaluation of the leading market players. Many ticked the boxes in terms of technical requirements, but Mendix stood out for its availability of expert implementation partners and financial services industry expertise.
“One aspect that set Mendix apart early in our evaluation was their delivery partner’s ability to understand our objectives and provide a clear demonstration of how we could achieve them using Mendix,” he said.
The team selected Mendix as the foundation for their new platform – Aurum. Alchelyst’s approach was to create an ecosystem of low-code-based modules which can be composed and configured to each client’s requirements.
“We recognize each client and their requirements are unique, and Mendix affords us the flexibility to offer tailored solutions to our clients,” said Gillanders.
Accelerating Time to Market
In mid-2023 Alchelyst began the development of their first module focused on the automation of Capital Events, alongside expert Mendix partner, AuraQ.
Leveraging a partner was a strategic choice for Alchelyst, as it would:
- Help them to expedite the delivery of their first and flagship piece of functionality.
- Provide their developers the opportunity to co-develop alongside Mendix experts to better understand the platform’s capabilities.
Prior to using Mendix, Alchelyst’s development team had minimal experience with low-code. While AuraQ did the bulk of the development in the Capital Events project, Alchelyst’s developers were able to follow, learn, and master the platform through the development lifecycle.
“We wanted hands-on experience with Mendix to ensure our development team could rapidly understand the technology,” explained Gillanders.
“Capital Events marked our first module in our client-facing technology. Its successful deployment provided us with confidence and a clear understanding of its capabilities. Aurum offers a digital and transparent experience every step of the way, and will be continuously developed to meet out our client’s evolving needs.”
Alchelyst’s business analyst effectively translated requirements to the development team. The abstracted nature of low-code has allowed them to take on a more active role in the software development lifecycle than would be impossible with high code.
“Even beyond design tweaks, our business analyst can test out a new piece of the user experience on their own, validate what the operations team needs, and then the developers can iterate from there,” said Gillanders.
Alchelyst will continue to evolve its offering to exceed market expectations. Gillanders estimates that they are achieving at least 4x faster development velocity with Mendix than with traditional coding.
“Considering the complexity of client requests, a 12 to 16 week lead time to deliver new functionality would not be uncommon using traditional methods. Using Mendix has considerably reduced this lead time and increased our ability to meet clients needs,” said Hayes.
Efficient and Transparent Capital Events
Aisling Hayes and her team are responsible for fund administration services to Alchelyst’s clients. With their extensive experience, they understand the challenges commonly faced in the industry.
They have already addressed a significant number of client issues through their work on Aurum to date and consistently provide feedback to the IT department to shape the future product roadmap. So far, customer feedback on Aurum has been very positive.
“Fund administrators can be wary of offering full transparency to their clients as there is often a lot of manual work going on behind what the client sees on a screen,” she said.
With their Capital Events module, Alchelyst has brought speed, transparency, and automation to this historically slow and manual process.
Typically, a capital call – the gathering of funds for a specific investment opportunity – is executed manually across email, spreadsheets, and PDFs, which change hands between the fund manager and administrator several times.
“It relies on a very tight collaboration between our team and the client, but it is also incredibly time-sensitive,” said Hayes.
“Failure in the capital call process not only affects the fund’s ability to invest but also its reputation. Poor service providers can significantly tarnish the reputation of a fund or General Partner.”
The Capital Events module in Aurum mitigates this risk by offering:
- A status tracker that shows both Alchelyst and their clients who the action is sitting with, and for how long.
- Document management with built-in version control to ensure that teams are always working off of the latest figures and information.
- A built-in, pre-determined workflow to avoid any guess work or confusion on who needs to take next steps, allowing for easy reassignment based on team member availability.
“Occasionally, a task might be overlooked if a team member is out of the office mid-cycle. Aurum offers full workflow tracking and transparency to the team, ensuring client deliverables and responsibilities are always visible,” said Hayes.
Centralizing call events also allows users to prioritize and re-allocate resources to the most time-sensitive work when needed – a benefit both for the fund manager and Alchelyst’s internal service teams.
With this data both parties can also see how long certain tasks took to complete, where they were stuck, and the percentage of tasks completed on-time to get ahead of potential bottlenecks and ensure they are meeting their SLAs over time.
“Traditionally it would take two or three days to do a capital event, whereas through Aurum we can do it in a day or so,” she added.
This efficiency opens up new opportunities for Alchelyst’s clients. Instead of turning away potential investments for fear of missing the capital call window and letting down investors, clients can confidently take on these turnkey opportunities.
“Our clients can take opportunities that otherwise might have been discounted just because it wouldn’t have worked out logistically, so there is also huge potential upside,” said Hayes.
Built for Speed and Flexibility
Mendix has enabled Alchelyst to close the gap between business and IT and bring solutions like Capital Events and more to their clients in record time.
Using low-code as the foundation for Aurum allows Alchelyst to rapidly demonstrate new features, both to win new clients and retain them. In most cases, Alchelyst can meet with a client or prospect and turn around a working demo for a new piece of functionality in just a few days.
“The fact that we can demonstrate, not just through slides, but by showing them something that they can see and touch after just a few days is really powerful. It shows that we’ve heard that customer and gives them confidence that we can move really quickly,” said Gillanders.