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Todd Moyer, Confluence

Over 80 per cent of asset managers predict fundamental changes to operating models in the next two years

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More than 8-in-10 (83 per cent) asset management professionals are expecting to make fundamental changes to their operating models in the next 24 months, according to Confluence’s 2017 Asset Management Trend Survey.

Respondents named Regulatory Change (60 per cent) and Technology Innovation (49 per cent) as the top driving factors in this transformation.
 
When asked to identify important goals for back-office operations over the next two years, majorities of respondents cited automation of back-office processes (62 per cent) and management of increased regulatory reporting requirements (60 per cent), with the latter representing a 13-point increase from the comparable 2016 figure (47 per cent). This rise is arguably ascribable to the recent implementation of SEC Modernization and multiple other post-trade regulations in recent years, such as Form CPO-PQR and Form PF in the U.S. and AIFMD in the EU.
 
Centralising fund data (42 per cent) was the third-most cited goal in this year’s survey. More than three quarters of survey respondents said it was extremely or very important to centralise in order to improve data accuracy and consistency (86 per cent, up from 80 per cent in 2016), minimise reporting errors (82 per cent, up from 80 per cent in 2016) and meet regulatory demands (76 per cent, up from 70 per cent in 2016).
 
Asset management professionals also displayed increasing concern about continued reliance on manual processes. As in the prior four Confluence Asset Management Trend Surveys conducted since 2008, “replacing manual processes with automated technology” was named the top back office goal. Highlighting the growing urgency of the issue, reliance on manual processes was singled out as the back-office challenge of most concern for 22 per cent of those surveyed (up from 14 per cent in 2016 and 12 per cent in 2008), making it second only to data accuracy and consistency issues (24 per cent). Nearly all respondents reported being concerned about manual processes and spreadsheets affecting the ability to control errors (90 per cent) and the ability to control costs (83 per cent), and those who were extremely or very concerned climbed 10 per cent from 2016 in each case.
 
“While the concerns of the asset management industry in 2017 are largely consistent with what we found in 2016, the rise in urgency on display is what really explains the transformation we have seen taking place this year,” says Todd Moyer, Chief Operating Officer at Confluence. “Our survey respondents clearly see that the time for automation and technical innovation has arrived. 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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