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Front Office Survey shows reliance on manual processes impacting investment performance

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9 February 2015

Survey of front office decision makers demonstrates relationship between high spending on manual processing and decreased investment performance.

SimCorp, a leading provider of investment management solutions and services for the global financial services industry, today announced the results of a survey of asset management front office participants which showed manual processing had a negative impact on returns.

Nearly half of the 48 respondents spent more than 15% of resources on manual processes in the front office. For participants in this category, average performance ratings were lower in every case.

In addition, only a quarter of those surveyed expressed confidence that their front office IT systems were able to automatically integrate data from external sources. Data originating from outside the front office, such as risk and performance metrics, corporate actions and collateral levels, for example, are all critical to timely investment decision-making and providing a complete and accurate picture of positions. Almost one in five (18%) of those surveyed indicated that their ability to generate and view intraday positions was inadequate.

This is further backed by close to a quarter of the respondents indicating they feel uncertain about the ability of their system to support new market entry (24%) and new asset classes (21%). These factors are growing in importance at a time when multiple studies have shown that incremental fee growth is likely to be generated by “non-traditional” asset classes.

The survey also demonstrated that the front office still needs some adapting to the regulatory burden, which has materialized post-financial crisis. More than one-third (37%) of respondents said they were not entirely confident in their ability to comply with regulation.

"In many cases, manual workarounds have been developed as a patchwork solution to ageing legacy infrastructure at investment management firms,” explains Klaus Holse, CEO at SimCorp. "These will struggle to provide the front office with a full and timely overview of their risk without moving to an integrated solution, which allows them to compete effectively.”

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Notes to Editors: In December 2014/January 2015, front office decision makers at buy-side investment management firms (with AUM at minimum USD 5bn) were asked to rate the efficacy of their current Front Office IT solutions to address today’s most prevalent business challenges. Responses were received through a web-based survey (only responses from verified Front Office decision makers were considered) or telephone interviews.

A total of 48 responses were received. Respondents include nine Chief Investment Officers (CIO) or Directors of Investment Management with the remainder consisting of Head of a function (e.g. portfolio management, trading) or asset classes (e.g. equities, fixed income).

While SimCorp commissioned the survey, none of the respondents are SimCorp Dimension clients.