Corporate actions don’t lend themselves to automation. Some of the events are quite complex and require a human to understand the impact –potential entitlements, exposure to customers’ accounts, whether you can partake or not. It’s no surprise then that much of corporate action processing remains manual. The problem is that it’s a zero-value-add proposition.
Yes, corporate action processing reduces exposure and risk, and is key to good customer service. But there’s no direct correlation between it and revenue. You don’t pay extra for a steering wheel when buying a new car – it was part of the deal. In the same way, if you’re providing fiduciary services, your customer expects you to take care of the corporate actions that affect their holdings.
So, in a world of growing margin pressure, how do you turn something that doesn’t earn revenue into less of a drain on resources?
The answer is technology and experience. When it comes to corporate actions, technology can provide some standard efficiencies, such as automating the review and management of the more straightforward, high volume events.
However, to avoid processing errors, firms also need experienced people in front of the technology to make the right decisions for customers. The complexity of such deals and the potential risks to firms and customers require that someone with knowledge of corporate actions and the overall market reviews the data.
There’s no book that tells you exactly how to process corporate actions, so people build up their knowledge over many years. Such experts can be expensive – and hard to keep.
So how do you obtain both advanced technology and human expertise without increasing costs?
You can now get a mix of state of the art technology and services that allow you to automate the workflow, alongside experienced professionals to execute the tasks and make decisions.
FIS, for example, has spent decades developing our corporate actions processing technology and adopting cutting-edge initiatives such as software delivery via the cloud. We’ve also invested in our talent by hiring industry experts who understand the complexities of corporate actions processing. This has positioned us to support firms on both fronts, in the most cost-effective manner.
Corporate actions differs from other functions in that they are not a question of technology versus humans. To manage corporate actions accurately and efficiently, you need both. Only that combination can take the costs and administrative burden off your list of concerns without increasing risk.