Get Data in Shape to Keep Up with Complex Portfolios

In fast pursuit of growth, more asset managers are chasing returns by extending into new markets and asset classes, and delving into sophisticated combinations of assets. But in the back office, diverse and complex portfolios inevitably mean more data to gather and reconcile at an increasingly rapid rate. So, how can fund administrators best limber up for the challenge and help their customers reach full speed?

In the race to beat the benchmark, well over a third of asset managers (36 percent) are now setting their sights on new geographical markets and business lines. As a result, their portfolios are more likely to contain a greater range of instruments, including illiquid investments and derivatives – many of which will be handled by disparate systems and third parties, each generating its own flow of data.

For the guardian of that data, the fund administrator, the plethora of solutions and third-party relationships involved in managing multi-asset strategies can strain day-to-day operations beyond their limit. Essentially, for both processing and reporting, data must move back and forth across a complicated landscape of external and internal systems – from custodians, prime brokers, trade-processing platforms and market data providers to internal customer databases and different fund accounting systems for different asset types.

And in many organizations, the sheer complexity of this kind of operational environment is putting both straight-through processing (STP) and data integrity under pressure. Operational risks, costs and agility are stake; and ultimately, so are new business opportunities and reputations.

Urgently, then, fund administrators need new ways to accelerate and synchronize the movement of portfolio data between relevant systems and third parties. Above all, they must demonstrate the accuracy of the data they hold on cash, transactions and positions, not just once a week, but daily or even intraday.

In short, reconciliation and intersystem validation processes need to speed up fast. That means no more manual checks, or risk-prone spreadsheets, and moving as many reconciliations as possible onto a robust, automated system that can handle multiple asset classes, instrument types and currencies.

While it’s likely that you already automate individual reconciliation processes, such as confirmation matching, this partial automation can actually hide the scale of the challenge ahead – and give you a false sense of security about the integrity of your data. More than a quarter of financial institutions operate more than four separate reconciliation systems at any one time, but still only automate a small fraction of reconciliation processes. And that leaves a high proportion of manual activity, with considerable potential for errors and risk.

FIS can help. Using best practice business-oriented models for standard fund servicing reconciliation types, our centralized service can manage all your reconciliations from a single, scalable platform. It ensures the highest levels of automation for reconciliation and exception management, and minimizes time to market for both new processes and delivery risk.

Critically, when setting up a new reconciliation, the service will also capture, meet and record the precise business objectives of the process. Far too often, these original requirements are known only by an inner circle of users; a centralized service with repeatable, well-documented processes prevents them getting lost when employees move on.

But first, there’s another question to consider: who prepares the data for reconciliation? A multitude of feeds from different password-protected sources – accounting systems, website portals, FTP sites and proprietary reporting solutions – can make gathering data an arduous, time-consuming and, yes, costly task in itself, with administrators often having to extract information from a range of formats, including PDFs and even faxes.

Luckily, there’s an answer to this problem, too. FIS provides not only a state-of-the-art reconciliation system, but also an end-to-end service for collecting and delivering all the data you need to be reconciled. That means we manage the flow and delivery of information from each source before standardizing it for easy consumption by our system.

From here data integrity can be automatically monitored and reported on, at the frequency required, by our reconciliation solution – putting you in a stronger position to ensure both accuracy and STP throughout operational process life cycles. So, no matter how complex the portfolios under administration, your data will be fit and ready for reconciliation and in peak condition for reporting.

Why not give your back office a sporting chance to support increasingly complex strategies? Email getinfo@fisglobal.com to find out more about FIS’ IntelliMatch reconciliation and data aggregation services for the buy side – and how it can help you keep up with complexity.