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Alan Goodrich

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Alan Goodrich - Goodrich analytiX Ltd

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How Fickle We Are With Funds

26 October 2007  |  4551 views  |  0

No, I’m not suggesting we are careless or eclectic with our money! Or, are we sometimes – in a way..?

I was part of the packed audience in Room 210 at one of the opening sessions, on the Monday morning of SIBOS this year, entitled: The 21st century funds industry: What are the critical success factors?

The assembled panel of experts was worthy of the turnout: Jean-Baptiste de Franssu, CEO at Invesco Continental Europe, Mark Kerns, Executive Vice President and Business Head of European Funds at The Bank of New York, Tim Keaney, co-CEO at BNY Mellon Asset Servicing, Robert Pozen, Chairman of MFS, Chris Ryan, CEO at ING Asset Management Asia, and Jean Sonneville, Managing Director of Investment Management Services at SWIFT.

Just to make sure we were all awake and paying attention in the audience, the session started with a “digivote”!

The panel asked us to vote for our primary concern for the industry, and the results were:

40% - operational efficiency and cost reduction

26% - convergence of alternative and traditional asset management

21% - structural changes

13% - regulation and the importance of a level playing field

To me, this seemed like a pretty fair poll result and probably a good reflection of where the industry still needs to invest, especially in technology. Confirmed, apparently, by Tim Keaney, who told us “more than 80% of the transactions we get from your distributors are manual”.

But then something happened on the way to the bank… the panelists, or at least some of them, seemed a little miffed by the result of the vote – did it mean that some of their initiatives were not having the desired effect?

Unfortunately, I have not worked out yet how to create a graphical “swingometer” in a blog, but by the end of the session, when asked to vote again, we showed just how fickle as a crowd we can be and moved our funds (potential spending priorities) quite considerably in just 60mins!

The results of the second vote being:

32% - (down 8%) - operational efficiency and cost reduction

32% - (up 11%) - structural changes

23% - (up 10%) - regulation and the importance of a level playing field

13% - (down 13%) - convergence of alternative and traditional asset management

Can it really be true that from the beginning to the end of the session the fund industry’s STP rates improved by 8%?

According to a study conducted by Deloitte and released by securities depository Clearstream not so long ago, the European investment funds industry could cut processing costs by 25% and gain over EUR 250 million by streamlining trading, settlement and custody of cross border mutual funds distribution.

It’s probably a wholly unscientific calculation, but in that case didn’t we witness the funds industry managing to reduce its costs by EUR 80 million in just 60 mins..?

Personally, I have always believed in my first instinct and initial reaction so I hope that the rest of the audience also saw an aspect of fickle human nature at play and did not go back to their desks and slash their IT spending budgets set aside for achieving greater automation in fund distribution!

I am sure that Tim Keaney’s statement that “more than 80% of the transactions we get from your distributors are manual” was as true at the end as it was at the beginning!

I may continue this theme further in my next blog, as it seems we have a long way to go…

TagsPost-trade & opsSibos

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Founder and owner of Goodrich Analytix Ltd.

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