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Automation Revolution Hasn't Fully Arrived In Wealth Sector - Study

Editorial Staff, 23 September 2020

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The figures come from Swiss financial infrastructure business SIX, which is owned by 122 banks as its users.

Wealth managers and other financial players want more automated solutions to help them know about and handle corporate actions such as rights issues, mergers and other moves, with the vast majority of them still handling this information manually, a survey shows. 

Swiss financial infrastructure firm SIX, conducted a survey from April to June among 54 respondents. It found that 87 per cent of them are processing part of their corporate actions manually and some 30 per cent process more than half of such actions this way. (SIX is owned by its users – 122 banks.)

The survey looked into the kind of work that wealth managers have to handle in the middle and back office of their business, the “plumbing” of the industry that end-clients rarely get to see. Sector figures say that this part of the business needs to be more “industrialised” to cope with price pressures and the demand for faster service. 

Some 45 per cent of respondents said they wanted corporate actions to be processed as close to real time as possible and a quarter of them wanted to start an automated project imminently.

“By relieving themselves of such a manual labour-intensive task, they will be able to reduce operating costs, manage growing corporate actions volumes and, in turn, service their clients better,” Annelotte De Nanassy, senior product manager, Financial Information, SIX, said.

Asked by this publication why automating certain processes is so important, a spokesperson for SIX said: “Manual processing of corporate actions can also lead to greater instances of error, which comes back to affect other parts of the business. If, for example, a rights issue is processed incorrectly and investment decisions are made on that basis then it is the individuals that own the client relationship who are responsible for explaining the error. This can affect the relationship with their client and impact the reputation of the business.”

“Some of these [corporate actions] are more time consuming to process than others. For example, processing dividends is a far more efficient process than handling more complex events with many options. However, the key point is that firms are having to deal with multiple different streams of corporate actions data which all require processing. This is especially important for wealth management firms which may not have the same amount of resources compared to a tier one or tier two investment bank,” the spokesperson said. 

“Just over half of the respondents mention that legacy technology is the greatest challenge to increase automation of corporate actions. Looking at cloud-based repositories may be a trend in the coming years to overcome this hurdle,” the spokesperson added.

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