SimCorp today announced the results of a joint survey with TABB Group with respondents from 44 buy-side firms. Findings indicate that outdated back-office capabilities negatively impact the agility of investment managers, compromising their ability to find new sources of liquidity, and ultimately, the capability to grow their business.
The issues discovered in the survey findings suggest a disparity between technology investments made in the front and back offices. According to Alex Tabb, COO of TABB Group, "The tendency for firms to invest more heavily in front-office technology than back-office platforms has created an ‘operational disconnect’ between the need to get into new products to drive alpha generation and the actual ability to do so. Whether you are a buy-side trader or a sell-side market maker, you need to be able to move in and out of markets and strategies deliberately and with agility. The fact that 57% report that their current back office systems do not support new market entry without the need for workarounds is troublesome, especially considering all the attention that has been given to the dangers of managing complex processes on spreadsheets.”
Key survey findings include:
56% indicated that their firms experience either significant or serious levels of pain as a result of legacy technology in the system infrastructure.
88% of respondents still rely on Excel spreadsheets to manage some front-, middle- or back-office processes. Spreadsheets create several versions of the truth and as a consequence, the integrity of the data being relied upon for business strategies and management decisions is not sound enough.
57% report that their current back office systems do not support new market entry without the need for workarounds.
75% are currently unable to process newer, more complex securities like swap functions without having to perform multi-step manual interventions, thereby increasing error rates.
70% rely on investment accounting systems that only refresh front-office systems overnight, increasing the importance of the need for an IBOR which provides up-to-the minute data across all asset classes.
"An overreliance on manual interventions, especially when it comes to processing increasingly complex investment instruments introduces systemic challenges that sooner or later will have to be dealt with,” explains David Kubersky, Managing Director of SimCorp North America. "Firms that operate with a short term, 'wait and see' perspective when it comes to adopting a state-of-art investment management system are running the risk of becoming legacy themselves if the system infrastructure in place cannot support the growth initiatives of the organization.”
To read more about the survey findings, please visit the TabbFORUM.
Enquiries regarding this announcement should be addressed to:
Susan Peter, SimCorp North America (+1 917 546 4654)
Kevin Maher/Miranda Garrison, Cognito, (+1 646 395 6300), [email protected]
Since 1971, SimCorp has been providing investment and portfolio management software and services to the world’s leading investment managers, asset managers, fund managers, fund administrators, pension funds, insurance funds and wealth managers. SimCorp’s world-class software provides global financial organizations with the tools they need to mitigate risk, reduce cost and enable growth. SimCorp is a global company, regionally covering all of Europe, North America and Asia Pacific. Listed on the NASDAQ OMX Copenhagen, SimCorp is dedicated to supporting the global investment management industry, its clients and its investors. For more information about SimCorp’s products, please visit www.simcorp.com/product.
About Tabb Group
Based in New York and London, TABB is the research and consulting firm focused exclusively on capital markets, based on the interview-based, “first-person knowledge” research methodology developed by Larry Tabb. In 2010, TABB launched TabbFORUM, the online capital markets community for peer-to-peer contributed opinion and analysis covering current issues, tracked daily by 20,000-plus professionals; in October, 2013, QuantFORUM went live, an online channel for the global quantitative investing community.