With increasing regulatory requirements and the need for higher levels of reporting and transparency, 29% of fund administration professionals surveyed by Confluence said they worry the most about the lack of automation of their key operations.
Confluence surveyed 178 back-office decision makers in its first Fund Administration Trends Study, and the results show that the industry is looking at automation to help meet some of today’s challenges. While companies are starting to move in this direction, Confluence chief operating officer Skip Smith said that the majority of firms still do
the work manually.
“I’m amazed at the amount of spreadsheets and manual processes that are used in the investment management back-office,” said Smith.
Confluence’s survey found that the second greatest concern is data integrity, with 24% of back-office professionals putting that at the top of their list, followed by 12% worrying the most about reporting errors.
“As [fund administrators] attempt to scale with implementing more staff, their error rates go up,” said Smith. “And the reputational damage to their firms or the fines that they can get from regulatory bodies by filing bad information I think is driving a lot of the automation as well.”
In terms of regulation, half of the respondents already use automation for reporting, while another 25% plan to do so within the next two years. Rounding out the top four areas respondents said they plan to automate over the next two years are expense payments and budgeting (24%), financial statement reporting (20%) and performance reporting (20%).
“There’s a tremendous risk to these organizations as the number of spreadsheets increase in their back-office because of these, for example, changing regulatory requirements,” said Smith.
These changing requirements contributed to 18% of professionals saying that the pressure to comply with disparate regulations in different countries is their greatest global challenge. Even more respondents, 35%, said that standardizing global processes while maintain the flexibility necessary for local reporting was the biggest challenge.
As globalization continues to occur, Smith said that he sees cloud-based computing as the way forward to meet these challenges.
“What we’re seeing is that the larger fund administration shops are embracing automation more quickly than the smaller ones. And I think there’s a real opportunity for some of the smaller players to leverage cloud-based computing platforms that can give them that global reach.”
Fund Administrators Worry Most About Automation, Survey Finds
With increasing regulatory requirements and the need for higher levels of reporting and transparency, 29% of fund administration professionals surveyed by Confluence said they worry the most about the lack of automation of their key operations.