Assets Under Management AUM

Reduce operational and compliance risks in asset management through digitization

How can the growing asset servicing business in Asia cope with the challenges as well as the growth opportunities? This article examines some of the main points.

This article is signed by ERI Bancaire.

The asset servicing industry in Asia has experienced phenomenal growth for several years, and all the data suggests that this growth will continue. According to the Securities and Futures Commission (SFC) survey of asset and wealth management activities, the asset management industry saw an increase in assets under management of 20% year-on-year (1) .

PricewaterhouseCoopers predicts that by 2025, the Asia-Pacific region’s assets under management will overtake all other regions of the world and nearly double, from $ 15.1 trillion in 2017 to $ 29.6 trillion (2).

This despite the world facing the unprecedented challenges of COVID restrictions, lockdowns and heightened geopolitical tensions. But as asset managers rejoice, asset management companies such as fund administrators and custodians are finding that this growth has created new challenges. These expose them and their clients to increased risks, particularly with respect to regulatory reporting, compliance monitoring, asset valuation and the processing of corporate actions.

With increased complexity comes additional risks, and asset management companies such as fund administrators and custodians need to recognize these risks and take a holistic, strategic approach to addressing them. In addition, they must do so without disrupting their profitability or operational capacity. As a leading technology provider for asset and wealth management, ERI asked many of its asset servicing clients what they saw as challenges for their business.

Careful analysis of the responses led us to a simple realization: these challenges are just symptoms of a single underlying problem that can be summed up in a single descriptive statement: data fragmentation due to disjointed business processes. . Combine this with a heavy reliance on manual and paper processes and tools, and the accuracy and consistency of data used across different operational divisions will undoubtedly suffer.

Operational staff constantly spend hours researching data from many sources and then checking it for accuracy and currency. These mundane tasks constitute the bulk of operational overheads. To solve this problem, asset servicing companies need to focus on streamlining how data travels through divisional chains to external ecosystem stakeholders. They should also focus on how they can maintain its accuracy and consistency, not only throughout the internal process cycle, but when communicating with external stakeholders, such as partners and other service providers who are part of the ecosystem.

This requires moving from the traditional operating model to a digital model to make it less dependent on manual processes and paper tools in order to achieve true and timely process integration by facilitating process integration, creating a source unique truth and enabling real-time updates of transactional data.

Having an appropriate technological infrastructure is the key to the success of such an exercise. To achieve true process integration where data can stay consistent in real time, the ideal solution would be to have a single unified system fully integrated with all operations / functions to achieve true data STP and provide functionality complete from start to finish. support for asset management.

Footnotes :
1, Asset and Wealth Management Activities Survey 2020, Securities and Futures Commission
2, Asset & Wealth Management 2025, PWC Asia

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