Read the article and learn about:
- Why process automation is higher on the agenda in Europe
- How tackling operational and data issues reduce costs and increase competitiveness
- Why supporting the front office and innovation are crucial challenges
- Why more North American heads of operations expect disruption from non-traditional competitors
Executive Vice President, SimCorp EMEA
Executive Vice President and Managing Director, SimCorp North America
Investment trends and market conditions change over time, reflecting and impacting firms’ investment strategies. What doesn’t change is that for these strategies to remain effective, operational efficiency must be at the center of attention. This article compares the results from two reports on the key operational priorities and challenges identified by 100 heads of buy-side operations in North America and Europe, respectively1. Learn about some of the key similarities and differences as well as some of the opportunities for leaders in investment operations to contribute more to their organizations.
As firms compete in a market characterized by increasingly fewer players, higher fee pressures, lower margins, and more passive investments and regulations, they need to look to ways of improving their competitiveness, by lowering costs and increasing operational efficiency. The two WBR Insights surveys carried out earlier this year among 100 European and 100 North American heads of operations, (Referred to as the ‘European report’ & ‘North American report’, respectively) showed that the primary issue to be tackled across the continents is years of patching together best-of-breed systems.
Short-term tactical solutions have led to an outdated and complex IT landscape, which is costly to run and requires a heap of manual workarounds on a day-to-day basis. Many of the shared challenges are symptomatic of outdated systems, causing data gaps and fragmentation. Facing margin pressure, today’s investment managers are realizing that they need to move away from legacy systems to improve operational efficiency and lower costs. It is becoming increasingly clear that to achieve this, and to aid the search for alpha, the current complexity must be replaced by standardized workflows and unified data within a consolidated investment management approach.
Underneath the shared symptoms of burdening IT legacy systems, we have singled out some key similarities and differences when it comes to rating challenges and strategic priorities among European and North American buy-side heads of operations.
Consolidation and overhauling legacy systems are top priorities to achieve automation
The European report reveals that buy-side firms are first looking to automation of operational processes to slash costs. The majority of these (81%) are spending resources on overhauling legacy systems, which comes out as the top strategic priority for 2018, to be able to achieve the desired process automation. European buy-side heads of operations replied that they are opting for automation and consolidation as their top cost-saving strategies for 2018. An astonishing 91% are working to reduce manual operational processes, followed by 67% focusing on consolidating systems, to bring down their firms’ cost-to-income ratio. No doubt, artificial intelligence can help increase automation, however, this is expected to come a bit further down the road, and hence artificial intelligence and robotics initiatives are still rated lower than consolidation and overhauling legacy systems.
The European report reveals that here buy-side firms are first looking to automation of operational processes to slash costs … No doubt, artificial intelligence can help increase automation, however, this is expected to come a bit further down the road...Jochen Müller, Executive Vice President, SimCorp EMEA
In North America, the report confirmed an overwhelming concern amongst asset managers and institutional investors over cost control, signaling an industry-wide red flag on the current status of investment operations among North American investment managers. The report showed that the top strategic priority among the heads of operations surveyed is consolidating systems and reducing interfaces (75%). Consolidation of systems therefore stands out as a key cost-reduction measure in both North America and Europe.