Custodians fell to the number-two spot, behind data vendors, as the main providers of corporate actions information, according to the latest survey of corporate actions issues run by SWIFT and CityIQ since 2003.
Despite that, custodians were still cited as the best corporate actions data sources by 43% of respondents, compared to the 32% who cited vendor data.
Overall, investments by financial institutions into corporate actions automation have increased since the second survey in 2008, with 90% of organizations having expanded automation in the time period, the 2012 survey found.
Furthermore, 85% of institutions polled said they would continue to increase investments into corporate actions automation in the near future. The investments are driven primarily by potential cost reduction, followed by risk reduction. Quality of service has moved up the list of drivers compared to 2008, according to the study.
The SWIFT and CityIQ survey polled 95 financial services firms from around the world.
A surprising 27% of respondents reported that they had not achieved any automation of corporate actions processes, according to the 2012 study. Of those that have implemented automated processes, the level of automation was greatest for outbound notifications, followed by inbound notifications, workflow, data capture and cleansing, receiving instructions and, finally, instructing on voluntary events, in order of the level of automation achieved.
Impediments to automation cited included (in order of greatest impediment) competing internal priorities; limited return on investment; difficulty in building business case; doubts about attaining straight-through processing; lack of management buy-in; and the cost of SWIFT messaging.
Institutions that have achieved some level of automation were split between those that use external software solutions for this purpose and those that do not, at 42% each. Ten percent of institutions say they use both, while 6% use external consultants. Only 6% of institutions said they preferred a cloud solution while the remaining 94% said they preferred on-premises solutions.
The most commonly cited number of information sources used by financial institutions polled was three to five; about 40% said they use two sources, while only a handful of respondents said they use either one source or six or more sources.
We believe that the size of the survey, its geographical reach and the range of organizations that took part give us a useful insight into what is happening in the corporate actions marketplace today, says Paul Wiltshire, director at CityIQ. Clearly automation on its own is only part of the story; standardization is what makes it worth doing.
Fabian Vandenreydt, head of Securities Markets at SWIFT, adds: We have worked hard in collaboration with our clients around the world to meet their demands for further automation. This global survey confirms that our efforts are paying off, with our clients benefiting from improved data quality and straight-through processing.
Click here to view the full study (PDF).
(CG)