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Data management issues driving risk investment strategies

15 October 2004  |  8439 views  |  0 trading_screen_5

The automation of reference data and corporate actions are emerging as key priorities for bank risk management investment, according to a global study conducted by AIM Software, the Vienna University of Economics and sponsored by Reuters.

The survey quizzed 1700+ banks from 63 countries about eleven key topics involving reference data management and risk management and indicates that financial institutions worldwide are making considerable efforts to increase data quality. The geographical areas where most banks reported plans to substantially improve data quality within the next two years were the Middle-East (79%), CEE (84%), Asia (88%) and Central & South America (92%).

The focus of banks' efforts lies in the automation of reference data and corporate actions processing, where the largest costs originate, says Martin Buchberger, head of marketing at AIM Software. He says that one out of ten institutions still employ more than 50 people for reference data management.

On a global perspective, 29% of the respondents currently plan to increase the degree of automation for reference data, 29% for corporate actions and 24% for pricing data. Altogether not less than 64% of the interviewed institutions are intending to enhance their level of STP.

Survey respondents showed a keen interest in standardisation efforts, with 17.4% of banks globally using ISO 15022 and high recognition rates in Asia (24.4%) and Western Europe (20.9%).

Looking further at standardisation, 42% of respondents plan to purchase an off-the-shelf data management solution or to buy and adapt a shrink-wrapped product to their own needs. Just over one-quarter of the sample rely on proprietary development.

"This is a significantly smaller proportion than in the past," says AIM's Buchberger. "This may be due to a higher demand of functionalities that cannot be developed anymore by a single bank in a cost-efficient way."

With respect to outsourcing, 18% outsource the development of a system and 14% the data processing itself. Outsourcing is especially popular in North America, the Middle-East and Asia.

Just over half of the sample (54%) regard workflow management as the major objective of data management, with event reporting coming in a close second at 52% - a huge leap forward compared to previous surveys.

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