60% of Asset and Wealth Managers View Reconciliations as the Greatest Challenge to Their Business
- Asset Management , Wealth Management , Data Management
- 08.12.2021 11:40 am
According to a survey recently carried out by automated reconciliation firm AutoRek and Worldwide Business Research, automation is high on the agenda in a post-COVID world. The survey, which consisted of half asset managers and half wealth managers with an average AUM of £1-50bn, revealed that manual processing, the availability of adequately skilled staff and appropriate automated systems are the top concerns for firms across the financial services industry.
Key findings include:
- Close to 95% of organisations have a dedicated annual budget for delivering process automation across operational functions, with half budgeting over £500k.
- More than 25% of firms said that their budget for delivering operational improvements greatly increased as a result of the pandemic, making it even more likely that firms will begin to action automation.
- Out of all manual operational processes, 60% of respondents said that reconciliations present the greatest challenge to their organisation. CASS 7 and CASS 6 reconciliations would benefit the most from automation, likely due to the FCA reinforcing the importance of protecting client assets during the pandemic.
- The top regulatory requirements for which organisations wanted more support from technology were Operational Resilience (52%) and Prudential Regulation (50%).
- 98% of organisations plan to invest in technology in some capacity to address regulatory requirements in the next 12-24 months, with a fairly even focus on Operational Resilience (52%), Prudential Regulation (50%), MiFID II Transaction Reporting (47%), and CASS Operations (40%).
While automation is a priority for many firms, the survey found a range of specific needs to be addressed depending on size, offering and clientele. Firms will therefore require bespoke solutions and, while some are looking to deliver these internally, an equal amount acknowledged that they would seek the support of an external vendor to deliver on their automation objectives.
Commenting on the results, Murray Campbell, Consultant at AutoRek, said: “These findings echo many conversations we have with clients who themselves are often weighing up this decision. Firms should certainly be mindful that even the best in-house solutions quickly become legacy systems. Outsourcing often gives organisations a better chance of staying ahead of the curve. As the regulatory landscape continues to evolve, it is clear that most, if not all, organisations would benefit from external help – not just in the form of an off-the-shelf technical solutions, but consultative expertise as well. Awareness of the availability of appropriate solutions and consultants to introduce automation is a challenge in and of itself.”
He added: “The pandemic has been an opportunity for businesses to learn about their organisations in a way few would previously have contemplated. By testing capacities to the maximum, many firms have discovered what they are truly capable of and where they require additional investment and support. There are still so many blank spaces in which automation could significantly assist firms’ approach to compliance. One in four firms don’t consider themselves well-placed to meet new IFPR requirements – now two months out from enforcement. A similar amount (31%) reported that they have not invested in an automated solution for achieving IFPR compliance and are not looking to invest in the future. Automation could be of huge help here. Firms that are able to strategically invest in the right tools and advice will reap enormous benefits and alleviate pressures for staff – both in IFPR compliance and beyond.”
The survey drew insights from 100 Heads of Operations and equivalent from firms across the UK with a range of qualitative and quantitative questions on the future of operational processes, automation and financial regulation.
You can download the report on the survey findings here.