More than 80% of fund administration leaders surveyed by Campos on behalf of Confluence are concerned that multiple manual processes, a common practice in fund administration, impedes their ability to control errors in reporting and documentation to investors and regulators. In addition, 80% believe that data consolidation is an important issue.
Confluence, a provider of automated data management released the findings of a survey of 115 “C-level” executives and other management professionals at these companies. The survey shows that nearly 77% are also concerned that manual data entry challenges their ability to meet reporting deadlines. Perhaps in response, more than 25% plan to centralise their fund administration data into a single database in the next 12 months.
“The findings support our belief that the industry is serious about employing automation as a strategic initiative to expand their business,” says Kirk Botula, executive vice president and COO, Confluence. “As more of these companies become global, fund administration automation is a critical strategy to increase productivity and reduce costs, while allowing them to grow efficiently and meet regulatory and investor requirements.”
Fund administration involves activities that support the process of managing collective investments such as mutual funds. These activities include preparing financial statements; holdings, performance, and pricing reports; documentation to support post-trade compliance; benchmarking calculations; investor marketing reports; and more.
Fund administration has become more complex and demanding in recent years as regulatory requirements and the number of investment products have simultaneously increased. Yet, use of multiple manual spreadsheets for these processes is still the “rule” at many companies. According to the Confluence survey, 26% of respondents rely on these spreadsheets for more than half of their fund administration processes, and another 23% rely on them for 26 to 50% of these processes.
“It’s the timing and the urgency that seems to be around this move, which is why we thought it was important to share,” says Dan Torrens, vice president of product management, Confluence
The majority of respondents also believe that it is very/extremely important to automate fund administration in order to:
Minimize reporting errors (84%);
Control administration costs (54%);
Improve data integrity (72%); and
Increase the scalability of operations (71%).
Additionally, seven in ten respondents (72%) believe that automating fund administration will also benefit their organizations by enabling staff to spend more time on strategic issues.
Confluence says it is not hoping that regulation will be passed toward automation. “We believe that automation and a platform approach to how you do fund administration is the best way to go, and it’s going to control costs and reduce your risks, but I wouldn’t be looking to push a regulation in that direction,” says Torrens.