In the fast-moving financial world, family offices face various challenges, especially when it comes to handling their financial data. One major issue is the lack of automated integration with external sources like banks. Relying on manual data entry for transactions and holdings is tedious and error-prone; simple copy-paste mistakes can cause reporting delays and bad decisions.
What does automated integration mean for family offices?
According to the PetakSys team, automated integration refers to the seamless, real-time, or scheduled data exchange between a family office’s internal systems and external sources. In other words, the family offices’ central system should be able to connect and automatically receive data from their banks, custodians, and market data providers. This can be achieved by using technologies such as application programming interfaces (APIs), robotic process automation (RPA), and secure data transfer protocols. This enables family offices to integrate commonly used platforms, including:
- Portfolio Management Systems (PMS)
- Client Reporting Tools
- Accounting Platforms
- Bank and Custodian APIs or SFTP Interfaces for legacy systems
- CRM Platforms for Client Relationship Management
- Market Data Feeds (e.g., Bloomberg, Morningstar)
What holds family offices back?
Firstly, many family offices may not know that they can integrate with their custodian banks and other service providers. However, the reality is that modern family office software not only allows for this integration, but it is even possible for those using legacy systems. PetakSys notes that while legacy systems are often seen as incompatible, many can still use data extraction services such as flat files or CSV files. And in fact, a significant number of banks today continue to use this type of data exchange via SFTP instead of adopting modern APIs.
Secondly, many family offices are held back due to a lack of internal IT expertise necessary to develop these integrations. The complexity of data and the need for standardisation present significant challenges. Since banks and family office systems often use different formats and standards for their data, accurately mapping and translating that information can be tough. Understanding the technical intricacies of various bank APIs, which can vary widely in structure and documentation, requires specialised knowledge.
Understanding the benefits
Automated integration can significantly improve the efficiency of a family office. For instance, suppose a family office client operates with multiple custodian bank accounts. In the absence of automated integration, staff must manually transfer data from each banking platform onto a spreadsheet, a process that can consume an entire day. In contrast, this task can be completed in minutes with automated integration.
Additionally, automated integration can improve security and regulatory compliance. For example, it’s not unheard of for family office personnel to share their access credentials to cover one another’s absence. Also, consider general passwords noted down and pinned to one’s desktop. While helpful, this practice poses security risks, particularly if the passwords can access bank accounts. With automated integration, there is no need to store or share passwords. Specific access rights to information can be granted to individuals, and the credentials can be kept securely encrypted within the system.
The long-term benefits of automated integration processes are significant. Unlike humans, who can experience fatigue, make mistakes, take vacations, or leave the organisation, an automated system ensures consistent efficiency in the daily operations of a family office. In fact, it can even enhance productivity.
For example, if manual data integration typically takes 4 hours for a family office, then handling a double customer base would require 8 hours of work. However, an automated system could complete the initial integration in just 1 minute. Even with double the workload, processing would only take 2 minutes. Clearly, automated integration provides a much easier way to scale operations.
Choosing the right provider
Family offices should look for these features or functionalities when selecting an integration solution:
- Monitoring: The system should be able to monitor what’s happening and send alerts if there are any errors.
- Customisable: The system should be flexible, allowing users to manually restart processes or adjust parameters.
- Error-proofing: If there is an error, the system should be able to recover or be manually restarted.
- Compatibility: Finally, the integration solution should be compatible with the family office’s specific data and workflows.
“With the right integration partner, even the most complex tech stack can become integrated.” – PetakSys CEO Tomas Petky.
Final words
PetakSys advises family offices seeking automation to initially identify their most time-intensive and error-susceptible processes, as these offer the greatest potential for automation. Even organisations using legacy systems can achieve seamless integration by partnering with a specialist. When selecting a provider, prioritise their proficiency in technology and family offices’ distinct operational and regulatory demands. Focus on practical enhancements rather than being swayed by AI trends, and explore automating connections with custodian banks or internal platforms for efficient, cost-effective solutions and a rapid return on investment.
