Bravura Solutions has published a White Paper suggesting fragmentation in fund transaction networks continues to hem in the industry, contributing to ongoing manual processing and rising costs.
The paper – The Hidden Inefficiencies of Fund Transaction Networks – surveyed asset servicers globally, representing some $108trn of funds under management.
Key findings include:
- 63% of firms rely on at least six different fund transaction networks
- Many are still manually processing trades by fax, phone and/or post;
- 88% report reduced costs and operational burden after consolidating connectivity
- 100% of respondents say a single connection to all fund transaction networks led to fewer trade errors, with STP rates reported of up to 99.7%.
Reliance on such a number of different fund transaction firms “leaves firms stitching together data from multiple networks, adding unnecessary complexity and operational burden,” Bravura stated.
Businesses are still having to put resource towards managing connectivity and even manually consolidate data for trade execution and reporting.
Significant ongoing downsides represented in the survey findings include operational inefficiencies, reputational risk, and resource burdens.
Automation could cut manual trade errors. For example, some 25% reported improved liquidity where they are able to achieve a comprehensive overview of all fund trades and their settlement status.
Chris Biddick, CEO, Transfer Agency at Bravura commented: “Asset servicers are processing a vast volume of trades each month worth billions of pounds, which is complex, and data errors can quickly snowball into major operational bottlenecks. With the majority of firms using multiple fund networks, this introduces greater risk, cost and complexity.
“Our new White Paper highlights the operational challenges asset servicing providers face due to this fragmentation across the industry. It illustrates the benefits firms report when adopting a unified approach to infrastructure which reduces some of these risks and frees up resource so firms can concentrate on their core business rather than managing connectivity and data.”
“A single connection to all fund transaction networks enables firms to manage changing client demand without requiring wholesale process or technology change.”
The White Paper can be viewed here.
