Strategic Priorities For The Middle And Back Office
Moving towards a stronger, post-COVID-19 economy remains a challenge as new variants develop and many nations are still behind in their vaccine rollout. Some of the most significant challenges that firms face in their daily operational processes are the number and volume of manual processes, the availability of adequately skilled staff and the availability of automated systems. Industries have been taking stock, analysing the transformation markets have undergone, and what can be learned and applied moving forward.
In order to gain insight into how buy-side firms think the future of operational processes, automating manual processes, and impeding financial regulations will develop, WBR Insights surveyed 100 Heads of Operations across the UK. AutoRek was on hand to provide expert analysis and commentary.
Discover our unique survey findings in our report: Asset and Wealth Management in 2022: Strategic priorities for the middle and back office.
What impact has the pandemic had on your organisation’s budget for delivering operational improvements?
A relatively even split exists between firms that have frozen their operational improvement budgets and those which have increased or decreased them. Accordingly, it appears the pandemic has affected firms of all sizes in a variety of ways. Some firms will have had the resources to pivot and meet the shifts in buyer behaviour during the pandemic, while those hit harder may lack the budget to follow suit. Respondents also revealed a shift in thinking in the direction of disruptions and future planning to keep the market flowing.
“The relatively even split between firms where budgets have either increased, decreased or stayed the same is broadly in line with expectations considering the last 18 months,” said AutoRek Asset Management Lead, Tim Fundell. “While the FCA’s operational resilience agenda and the shift towards homeworking have encouraged many to enhance their operational efficiency, firms who have been negatively impacted by the pandemic might not have the budget to allow for this.”
What is your annual budget for delivering process automation across operational functions?
When it comes to budget allocation for automation technology, we are seeing an even split, this time between those allocating more than £500k and those spending less. Automation is set to become an ever more powerful influence in asset and wealth management with the power to boost all operational processes from reconciliations and AiFMD to CoRep/FinRep and prudential. Respondents identified a number of specific tasks that would benefit the most from automation, and are prioritising custom-tailored solutions from reliable providers, and socially responsible automation.
“Firms will consequently need a thorough understanding of their most significant priorities and where the return on investment can be achieved if they are to maximise the opportunities available to them,” said Fundell. “Those with budgets of less than £500k should be mindful that specialist third-party solutions will be the most suitable option.
Where are your organisation’s focus areas for investing in technology to assist with meeting your regulatory requirements over the next 12-24 months?
The regulatory environment is becoming increasingly complex, requiring significant investment in technology. 47% of our respondents said that they were not yet prepared for meeting the requirements of the upcoming IFPR. In the latest news from the FCA, it is indicated that operational resilience and prudential regulation are key areas of attention moving forward, and it would make sense that most investment is going into these areas.
“The range of priorities identified here reflects firms’ awareness of the regulatory horizon,” said AutoRek Consultant, Murray Campbell. “As we have seen with many firms, investing in technology to support CASS operations is likely to be a key area where they can realise tangible benefits.”
Final Thoughts
Many buy-side firms are facing the question of how to adapt to the competitive landscape as it continues to change, improve, and adapt? Our findings reveal that such firms will require a configurable automation solution and external consultative expertise to succeed in 2022 and beyond.
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