Almost a third (30 per cent) of asset managers outside of North America continue to maintain legacy platforms despite the technology’s role in trade delays and errors, according to a TABB Group survey.
The research, “The Buy-side Legacy IT Hangover: Finding the Cure for Alpha, Compliance and Growth,” reveals trade delays caused by inadequate technology account for opportunity costs of anywhere up to 50 per cent of revenue.
The risk of not meeting the needs of both clients and regulators means loss of assets, potentially incurring large fines and not sustaining profitability and growth.
In the report, TABB senior analyst Dayle Scher (pictured) reveals how non-North American investment managers are approaching their technology needs and what the resulting impacts are. Scher explains that as investment organisations pursue new clients and new asset classes, the supporting IT infrastructure must be able to support growth, compliance and scale.
Though there are notable differences between global investment managers and their North American counterparts TABB previously surveyed, there is an overarching universal need to attract assets with an integrated technology approach. Although TABB found one third of asset managers outside of North America have adopted a single vendor, single platform technology, there are still a number of prominent hurdles to overcome.
Almost 20 per cent of non-North American buy-side firms spend more than an hour a day rectifying errors that result from manual processes, while half of investment management firms experience technical problems in executing pre-trade compliance checks, exposing them to avoidable financial and reputational risks.
“An increasing number of rules and regulations are putting the squeeze on asset managers across the globe to be compliant,” says Scher. “The main reason for firms missing the mark on pre-trade compliance checks is the lack of integration and consistent data cross systems. In fact, nearly 40 per cent of our survey respondents who had issues with compliance checks cited lack of integration as the cause.”
