Technology transformation opens new doors in the Middle East

If you were to give a helicopter view of the Middle East fund market, what key trends do you see? 

From an investment management perspective, the Middle East as a whole is very much a growth market. Many countries have current account surpluses with exports exceeding imports, meaning there’s excess capital to deploy. So, the different sovereign and state-owned funds along with central banks here are looking for the best way of doing that to sustain long-term growth while also maintaining monetary policies. 

This requires them to take new steps in the fields of technology, diversification, and tightening of their operating models to run as efficiently as possible.

Kashif Khalid, Managing Director, Middle East and Africa

In addition, the region is attracting investment and talent from across the globe while also growing its own citizens’ know-how, leading to a fast-moving environment. 

How is this growth case materializing? 

In essence, we see a desire to diversify as much as possible and deploy capital overseas or into local projects that help with growth. It’s long-term investing while also managing current economic conditions, so many are after a range of different asset classes. Both the traditional ones like fixed income and equities, but also private equity, real estate, infrastructure and so on. The state-owned investment funds essentially want to look after their citizens and run large pension funds to help with securing their wealth, and that often requires ongoing innovation and, with that, new technology.  

What are the underlying market and business drivers currently? 

To a large extent, it’s the same patterns that we see elsewhere given how local the world has become. It’s a competitive market and it is an increasingly dynamic one where institutions are looking in different directions to find net alpha. They need to grow their topline and optimize their bottom line.

So basically, they want to squeeze the middle part of the income statement, and by doing so, need to find enablers such as cloud, consolidation, outsourcing of services etc., which gives more flexibility and the scalability to grow investments and operations through economies of scale. There is no room for compromise on quality and having access to data, and the means to be able to process it systematically and efficiently is key. This allows them to identify risks and opportunities by gaining insights that are not always so apparent, and that too at increasing speed and agility.

How do you then go about it if you look to establish a firm presence in the region? 

In many ways, it’s about unlocking synergies because everything is so well-knitted together from a cultural and values perspective. In the Middle East, people build long lasting relationships and partnerships. Business will follow. The same goes for Africa, where we have just signed our first client – and our clear ambition is also to grow more in this region. 

Understanding the dynamics are key for a company like SimCorp as it also helps us bring our value proposition to the table and how we can help with business growth for the different parties we talk to in the region. We’re also able to share our experience from a vast client base and that is seen favorably. Clients can really visualize business outcomes and this opens up doors.  

So, I think if we look at sovereign funds, pension funds, central banks and so on, this is where a lot of the wealth is. It has to be managed well and meticulously, and SimCorp is continuously taking new steps to become a proactive partner in helping them ensure that.  

What is SimCorp then offering to help them reach their goals? 

SimCorp provides partnership for the buy side in the region to be able to drive their strategies by being a key part of their business models. This includes a platform that is front-to-back, cross asset including both public and private asset support and the ability to outsource non-core investment processes, letting institutions focus on their actual investment decisions and less on operations. 

We understand that certain jurisdictions also prefer their platforms to be deployed on-prem or on local data centers, so we support this along with a public cloud offering. Not only does this allow firms to streamline their business infrastructure and processes to enable their top line growth, but also helps them become leaner by relying on latest technology offerings including AI and machine learning.  

To top it all, we provide optionality across the offerings we bring to the region. Regardless of your strategy, ambition, regardless of market conditions and volatility – to always provide our clients with the strongest possible platform to support and enable our clients in their business and provide them with the flexibility they need to build a setup that match their operating model, that’s what we do.