Data complexity is hitting asset management and capital market firms hard, new research from AutoRek has found. The study shows that four-in-five (79%) respondents said their reconciliation processes struggle to handle their current data volume, or would struggle if their volumes were to increase. More worryingly, more than half (57%) of the firms surveyed manage their data reconciliation processes either through spreadsheets or a combination of spreadsheets, in-house systems, and legacy software applications.

The research report commissioned by AutoRek, a leading software provider to companies in the global financial services sector, sought the views of 250 senior managers, or above, in asset management, capital market, hedge fund and fund admin organisations across the US. It revealed that firms are expecting a 39% increase in daily volumes over the next two years, putting additional strain on existing systems which are ill-equipped to manage such growth.

“While asset management firms have invested in modernising their front-end business, very often back-office operational processes have been neglected. Firms are relying on outdated systems and processes, which not only create inefficiencies but also expose them to greater risk,” said Jack Niven, VP of North America, AutoRek. “With transactional volumes only set to increase and regulatory demands tightening, it is imperative for firms to invest in modern data infrastructure. Failure to do so will leave them at a competitive disadvantage in an increasingly data-driven and regulatory-intensive environment.”

As asset management and capital markets firms look to move beyond legacy systems and manual processes, the need for robust automation solutions has never been clearer. The report highlights how automation offers a clear pathway to firms by providing them with the tools they need to reduce costs, improve efficiency, increase control, and meet increasingly complex regulatory demands. Encouragingly, more than one third of firms (36%) are currently focusing automation plans on their reconciliation and transaction matching processes.

Further findings reveal that adopting advanced technologies like AI and ML will offer huge benefits including increased productivity (36%); increased operational efficiency (36%); a reduction in human errors (29%) and the ability to handle increasing data volumes (28%).