Asset managers look to software to protect brand reputation

A stricter regulatory environment and increasing compliance requirements are influencing asset managers to emphasize data accuracy in their operations and adopt technology solutions to ensure flawless workflow management and reporting.

Financial data reporting must be done right
According to The Wall Street Journal, the asset management industry is now worth $87 trillion globally.

“Errors in data reporting can lead to substantial losses in revenue over the long-term.”

In such a sizable and highly monitored industry, reporting accuracy is paramount. For asset managers, errors in data reporting can lead to substantial losses in revenue over the long-term, and can result in regulatory infractions that significantly affect a firm’s reputation.

Reuters reported in November that the Royal Bank of Scotland admitted to submitting erroneous data for European bank stress tests conducted one month prior. The incident caused embarrassment for the bank, which also experienced a computer systems failure two years ago that prevented customers from accessing their bank accounts.

The need for sophisticated technology solutions
Money Management Executive recently reported on the trend in the finance industry to purchase and integrate technology solutions to eliminate the risk of inaccurate reporting. Todd Moyer, executive vice president and global head of business development at Confluence, an investment data management firm, commented that increasingly, senior management is concerned with data accuracy and technology systems.”We are seeing more chief compliance officers and COOs involved in our client meetings, because errors in managing and reporting investor and regulatory data are increasingly seen as a reputational risk that can quickly result in a loss of assets,” Moyer said. “I think there is a growing concern among asset managers that if investors think they can’t rely on them to deliver consistently accurate reports, they won’t be able to trust them to manage their money.”Confluence conducted a survey earlier in the year that found 61 percent of asset managers expressed interest in replacing manual back-office functions with automated technology.

Investment in new technologies
In order to ensure that an asset management firm is conducting its business at the highest level of operational efficiency, senior partners are investing in new technologies that help guarantee alignment with modern compliance standards.

Michael Rosella, chair of investment funds at Paul Hastings, explained that today, technology and compliance are inseparable.

“Tech and compliance now go hand-in-hand,” Rosella said, according to Money Management Executive. “Because so much information is flowing through the regulatory framework of the asset management business, if they are not coordinating with their tech folks, they are going to be lost. You can’t just have a spreadsheet that looks at leverage limitations. You need software that can deliver data in real time. The old fashioned way of doing things by hand is not going to work.”

Technology solutions and compliance go hand-in-hand.

Stakeholder participation
Asset managers looking to upgrade their technology systems may have concerns regarding deployment time. Kevin MacDonald, co-CEO and co-founder of Black Mountain Systems, encourages companies looking to invest in software, to have participation from all business units, especially finance and IT.

“Our favorite is when both the technology and business groups participate,” MacDonald said, according to Money Management Executive.