Is 2013 the year to take client reporting to the next level?
Heading into 2013, research and advisory services firm to the financial services industry CEB TowerGroup anticipates the push toward higher levels of transparency and disclosure to be a major business driver. Pressured by regulators, clients, boards of directors, and shareholders alike, firms are being compelled to disclose more information, on a recurring frequency. This movement for transparent reporting and information disclosures will have significant consequences on future IT projects and operational practices.
Client Reporting Technology
One way to meet stakeholder expectations is through updated client reporting technology, solutions that automate data extraction to create reports and summarise portfolio performance against strategic objectives, market indices, and peer investments. CEB TowerGroup recently ran a poll among their capital markets membership base to identify their top business drivers and key areas of technology investment in 2013, one of which was client reporting technology. Survey results revealed that improving internal and external reporting capabilities for both vendor (80%) and institutional respondents (84%) was a priority for 2013.
Industry Drivers & Initiatives
The dual demands of regulatory changes and client focus were found to be the drivers for the investment management industry in 2013, according to another recent survey by investment consultancy Investit. The poll on key initiatives among managers indicated that regulatory change is the top concern, but 86% of firms are also stretching to meet client demands. In the year ahead 85% of firms aim to improve their client management and on-boarding activities to increase client retention; 75% will be tackling client reporting and information delivery; and 67% will focus on enhancing their efforts to acquire new clients. Investit also revealed that over the last few months, there has been a general trend to integrate CRM systems (usually cloud-based) into existing functionality.
Previous Investit research has shown that strong client service can retain clients by up to 18 months longer during periods of weak performance. This realisation is perhaps one of the key factors driving firms to deliver exceptional service by increasing their value proposition to clients.
Customisation, Automation & Outsourcing
Investment management firms are becoming more open to outsourcing operations as they review the effectiveness of their operations and look for ways to better streamline their processes. Outsourcing providers have evolved, offering more services and options and working more in partnership with firms. This allows customised solutions that are better aligned with business objectives and lets the asset manager direct how much or how little control is handed over to the service provider. It is likely that as investment managers continue to work through the slow market recovery, combined with on-going regulatory pressures and outdated in-house technology, the move to outsourcing will become increasingly the norm as a part of the overall IT strategy. Outsourcing the appropriate functions in the middle-to-back office not only allows firms to reallocate resources and potentially reduce cost, but it can also make companies more agile, competitive and compliant.
Alan Hamilton, CEO of Equipos, a client reporting and communications solution provider, told iss-mag.com: “Key to the institutional market is the ability to verify data at source, automate its journey and do one final check at the end. This vastly reduces the time taken to amass and produce data and also reduces to risk of data inaccuracy through the manual transfer of data.”
The year ahead
The new year does not appear to be bringing with it a sense of business optimism and as a growing number of investors reel from low returns on what were previously considered ‘safe’ investments, the need for regular performance updates and, in a growing number of cases, automated client-reporting portals has assumed even greater new importance. After all, when investment returns are hard to find attention then focuses on service.
You can hear more details about these topics at the 17th annual Client Reporting & Communications conference being held on 19-20 November in London.