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Regs and Tech Drive Asset Managers’ Back-Office Transformation

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Asset management professionals overwhelmingly predict fundamental change to their operating models in the next year or two, according to the latest trend survey from Confluence, whose data-centric platform provides regulatory reporting, investor communications, and performance and analytics solutions.

Eighty-three percent of survey respondents identified at least one factor that would bring about fundamental change in their operating models over the next 24 months. Sixty percent said this would be regulatory change, and 49% said it would be technology innovation.

Schmidt Market Research conducted 125 online interviews between Sept. 7 and Oct. 8 with asset managers and third-party administrators to assess perceptions and attitudes about the asset management industry’s greatest operational goals and biggest challenges.

Asked about important goals for their back-office operations over the next two years, 62% of respondents cited automation of processes and 60% said management of increased regulatory reporting requirements. The latter represented a 13-percentage point increase from the comparable figure from the 2016 survey.

Confluence said this increase may be ascribable to recent implementation of SEC modernization and other post-trade regulations in recent years, such as Form CPO-PQR and Form PF in the U.S. and AIFMD in the EU.

The survey results showed that centralizing fund data was the third-most cited goal in the 2017 survey. More than three-quarters of respondents said it was extremely or very important to centralize in order to improve data accuracy and consistency, minimize reporting errors and meet regulatory demands.

Asset managers also expressed increasing concern about continued reliance on manual processes. Confluence noted that four earlier surveys, dating back to 2008, showed “replacing manual processes with automated technology” was the top back office goal.

In the new survey, 22% of respondents said reliance on manual processes was their most pressing back-office challenge, up from 14% last year, and second only to data accuracy and consistency issues.

Nearly all respondents said they were concerned about manual processes and spreadsheets affecting their ability to control errors and costs.

“Our survey respondents clearly see that the time for automation and technical innovation has arrived,” Confluence’s chief operating officer Todd Moyer said in a statement.

“Heightened regulatory requirements are turning a pent-up desire to automate into a need to automate. And technology innovation in the RegTech space is enabling this fundamental transformation in back offices across the industry.”


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