Steve McGovern, Senior Manager, IMS Professional Services, speaks about the issues and challenges facing middle office operations today. Steve summarises the priorities in terms of action to improve operations and then explains the approach taken by DST Global Solutions to help investment firms optimise middle office operations. (4:48)
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Transcript
DST Global Solutions is a provider of solutions across the asset management industry. We’ve been in business for about thirty years and one of the things we pride ourselves on is that we've been through many of the ups and downs the markets, so we’re well positioned to address the issues that we see today.
My particular role is in rolling out our new middle office platform and solution that addressed we believe some of the key issues in the market today.
With a financial crisis easing I don't think it'll be a return to business as usual. I think firms are going to have to take action. Not only have their clients lost significant portions of their wealth, they’ve also lost trust in the firm so I really think that they are going to have to respond to that.
To regain the trust of their clients the industry really has to examine their processes top to bottom to make sure it will stand up to the rigorous scrutiny that exists in this environment, so they not only have to look at what they've done but how they are doing it.
Firms really have to begin to regain that trust and to examine their processes. Where they really have to look at is within the firm what are their major challenges. We think there are really three major challenges that firms have. One is you know, the oversight of their investments and do they have the appropriate structures in place and processes to do that. The second is operationally are they efficient. So in this environment cost is a big issue and so they really have to look at that and then finally can they provide the transparency that’s needed, do they have the reporting the tools available to them to be able to report to their boards, the regulators and their clients.
A typical example that firms face today that we've worked with, are asset owners who have outsourced much of the responsibility for running their systems and in some cases investing their assets, they've counted on their service providers to give them the information they need on a monthly or periodic basis to allow them to see how they're doing. That’s not going to be good enough. They really need to have a complete view of their portfolio at any given time.
In order to address these issues we believe firm's really have to move towards a complete view of their portfolios at all times, so really a daily view if they’re not already there and what that does is then give them the tools to be able to oversee and address their future responsibilities. So regardless of whether they’re clients, the regulators, or the board, whatever question they are asking they have the information at hand. So for example if there's a problem in that particular country, today many firms have difficulty understanding what their country exposure is, because they're assets are held in many different investments. By bringing that information together they're able to answer that question quickly.
Certainly one of the challenges that firms face in addressing this is that its a constrained cost environment, but unfortunately they really can't wait and so really again it's all about prioritisation, understanding of what the issues are and then moving forward.
We at DST global solutions appreciate that many firms can’t make the kind of capital investment that’s needed so that's why we're now offering many of our solutions as part of a platform so that we can reduce that initial IT infrastructure cost and give them the tools that they need to manage their investments.
One of the challenges I think firms face today in making these investments is the uncertain regulatory environment and so again one of the areas we believe we add some value is that we’re used to that market – we’ve been through over thirty years of market dislocation and change and so we understand the need to deliver flexible systems and so I think companies need to be looking at their investments, making wise investments in systems that are most flexible and can deliver the value they need to solve their immediate problems.
