New York - InvestOps and SimCorp have released their findings from the 2017 benchmarking report, titled Optimizing Front to Back Office Investment Operations. The report explores the compression of the front, middle, and back office and how this is redefining data and investment management systems.
The new report is based on a survey of 100 Heads of Investment Operations based in North America.The research prioritized buy side firms, including asset management firms, hedge funds, institutional investors etc. The report tackles the role of operations and the impact of regulation, as well as operational efficiency, change management, and spend prioritization.
"The survey clearly outlines the pressures that are faced by the front, middle, and back office which is leading to increased compression - mainly as a result of the technological advancements that came out of the 2008 crisis, namely highly automated trading systems," stated Oliver Kirkbright, Conference Producer at Worldwide Business Research. "Driving down the cost of operations remains the key area of focus for operation with automation topping the list of strategic objectives. This combined with the complexity of Mifid II and Dodd Frank paint a very challenging operational and compliance landscape for the buy-side industry."
"So much of this comes back to data lineage, accessibility and accuracy. A lack of a single source of truth, like an Investment Book of Record, requires investment managers to develop desktop solutions for data collection, reconciliation and reporting," stated Marc Mallet, VP of Product, SimCorp North America. "The lack of centralization and automation creates significant operational and reputational risk - reporting inaccurate or incomplete data is a likely outcome."
Key statistics from the survey include:
- 64% of executives identified Mifid II as the most challenging regulation from an operational and compliance standpoint
- 79% believe that blockchain can be implemented in financial markets
- 77% of respondents will allocate up to 20% of their overall revenue to IT spending
- 48% of respondents believe that their technological capabilities are only functional, rather than innovative
- 36% identified private debt as their most popular source of liquidity
- 27% of respondents feel 'client demands' will be the biggest driver of change within the industry closely followed by the evolution of market infrastructure
Closing the "data gap" is just one dimension of the larger changes that are redefining investment and data management systems. The convergence of inadequate data management, renewed consideration of insourcing over outsourcing, and continuing compression of the front, middle and back office are behind a growing importance of obtaining a more unified view of the portfolio for asset managers of all kinds. To download the full report, please click here.