FIS Blog

Corporate Actions Management – The Shift is On


Adam Brill | Thursday, September 1, 2016

Corporate actions are a high-value business – especially if the process goes awry. Ensuring that the processing of events is as efficient as possible has led many banks to pursue projects to automate as much as possible. However, keeping up with an ever-evolving industry can be daunting. That’s why leaders in the field are embracing new technologies and innovation, including updates to ISO messaging standards, rapid mobile technology adoption, improved client services and a shift in the way they plan to manage their operations in the future. 

Reducing cost is a big driver, but improved differentiation and client services are nearly as important. As the number of companies involved in corporate actions has grown, more events are announced in markets globally, and managing each event is becoming more complicated. Corporate actions are unregulated and can be sudden or unexpected events; this recipe makes it exceedingly difficult to anticipate what type of events will be announced at any given time. 

Automation of the process requires applications to be flexible enough to handle different types of data. With dual standards – ISO 15022 and 20022 – updated annually, SWIFT users often must make ongoing enhancements to their internal systems at a great expense. The precipitous adoption rate of processing in the consumer market is transformational for the enterprise market as client service mandates have a “trickle up” effect on business. 

Demands on technology will change in much the same way for corporate actions processing. As consumers of information across industries have become used to near or real-time data, expect an increased demand for real-time information, and the anticipation of immediate interaction through mobile devices to become the norm across financial services. 

The use of cloud-based, hosted or managed services platforms can be an enabler here, but they also represent a shift in the service paradigm to offer a more efficient and scalable way of providing access and information to customers. Organizations that do not keep up in either the race to be first or the race to be right will be left behind.

In addition, many organizations will transition operational functions from in-house to outsourced providers; Financial institutions recognize that maintaining the required technology infrastructure and knowledge to automate workflows and comply with standards that are updated annually is not a sensible use of resources. 

However, not all outsourced environments are created equal. Financial institutions are beginning to appreciate the difference between outsourcing functions to generic offshore IT service providers that lack domain experience, versus outsourcing to operational centers of excellence that are staffed by proven, experienced financial services operations and technology teams.

Increasingly, firms are realizing that significant portions of their operations are commoditized and replicated across the industry. Acknowledging that there is zero added-value in the cleansing of corporate actions data, for example, highlights the attractiveness of the use of a utility for this function, thusly removing a burden by providing multiple organizations with access to services and information that are neither client-facing nor provide differentiation. 

With constrained resources and shifting demands, getting better use of expenditure is vital. Developing a flexible, scalable set of systems is leading firms to move more operational functions to experienced solution providers who are positioned to help them adapt to industry and business changes.

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Tagged in: Corporate Actions, Institutional and Wholesale, XSP

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