Navigating the $65T Alts Transformation

Alternatives are outgrowing the infrastructure behind them

If you're running alternatives operations today, you already know the pressure: capital flowing in faster than your systems can support it, manual processes consuming the majority of your team's capacity, and LP expectations that your infrastructure simply wasn't built to meet.

In a recent SimCorp webinar, practitioners from CN Investment Division, Alpha Alternatives and SimCorp mapped the operational gap widening across the industry and what it takes to close it. The panel discussed what successful transformation actually looks like in practice: integrating ABOR and IBOR, aligning accounting and investment views of the portfolio within a single data model to eliminate reconciliations and establish the data foundation that more sophisticated operations demand. Here's what every alternatives team needs to hear.

The operational gap in alternatives is widening

Private markets are growing at a speed and scale the industry has never experienced. Alternative assets are projected to reach up to $65 trillion by 2032¹, with private credit now rivalling traditional fixed income for institutional flows. Retail investors are entering at scale, and LPs everywhere face mounting pressure for greater transparency, faster reporting, and tighter standardization. Yet operations and legacy systems maintenance consume 60-80% of technology budgets at most firms². As allocations grow and investor expectations intensify, that gap is becoming impossible to ignore.

The strain is not only a function of volume. The structure of the market itself is changing. Underpinning this operational strain is a deeper structural shift. The traditional LP-GP model was straightforward: LPs wrote checks, GPs deployed capital. Now, LPs are building internal deal teams, pursuing co-investments and SMAs, pushing fees down, and in some cases competing directly with their own GPs for deals.

The operational implications are significant. Each of these shifts generates new data requirements, new reporting obligations, and new compliance considerations that legacy infrastructure was never designed to handle. Talent gaps are compounding the pressure further. This is because institutions outsource areas that they have not yet built in-house such as specialized underwriting and monitoring capabilities. The result is an industry whose operational complexity is growing faster than its operational capacity. 

Three challenges facing alternatives teams now

Three interconnected challenges dominated the panel's discussion, each representing a different dimension of the operational gap that alternatives teams must now close. 

The evolution of operational environment surrounding alternative investments

Pension plans have been allocating to private assets for decades. But growing complexity across fund types, legal structures, and geographies created an operational environment that was increasingly difficult to scale. Operational teams found themselves with resource-intensive manual processes, fragmented systems demanding constant reconciliation, and a mounting difficulty retaining experienced staff in an environment dominated by low-value data work.

Many of these challenges can be addressed by building an operating model containing an integrated ABOR and IBOR within a single unified data model. Cross-system reconciliation gets eliminated, removing a significant drain on operational bandwidth. Accounting, performance, and investment functions now work from shared data, with more collaboration and far less friction between teams.  

With the data foundation in place, including the proper governance and data quality controls, organizations can then pursue a more ambitious AI strategy with reliable output. 

We need to get to a place where someone that needs information can ask the question through AI and get answers that are correct. That's really what we're working towards, less about dashboards and reporting, and really moving towards getting answers directly.

Marisa Melino, Managing Director, Investment Operations and Finance, CN Investment Division 

Building the infrastructure alternatives now demands

The operational gap in alternatives doesn't close itself. The firms pulling ahead aren't waiting for GP standardization to materialize, or for AI to solve problems that fragmented data infrastructure created. Instead, they are doing the foundational work first: a single book of record, public and private exposures side by side, updated in real time. Automation and standardization at scale. Then, layer AI to compress the time between insight and action. Firms that follow this sequence will make better decisions, retain talent and compete in a market that has already moved on from the infrastructure most of them are still running.

Watch the full webinar here: On-Demand Webinar: SimCorp Update: Alternative Investments 

Footnotes

¹ Private market assets to grow at more than twice the rate of public assets, reaching up to $65 trillion by 2032, Bain & Company finds, Bain, August 2024

² How AI could reshape the economics of the asset management industry, McKinsey & Company, July, 2025