The growth of cloud-based technologies will see many smaller players in the asset management industry move to automate their corporate actions in 2013, according to solutions providers DST and XSP.
The two providers have been holding a series of seminars with investment managers on the automation of corporate actions to manage Australia’s $1.82 trillion in institutional assets.
Geoff Harries, head of asset servicing at DST Global Solutions, says there are around 90 “event types” of corporate actions, from rights issues to the payments of dividends and proxy voting.
He said that currently in Australia, many smaller companies “down the food chain” of the data flow were executing these actions manually, which was not only more costly but prone to error.
“If these actions are misinterpreted at any point along the way, the cost can be substantial,” said Harries.
Brendan Farrell, chief executive of XSP, said the seminars had revealed that 82 per cent of attendees were planning to increasingly automate their actions in 2013.
“This was across issuers, custodians and administrators, so that figure should show that a great many of these processes are still manual,” said Farrell.
“It is like a food chain, and our role is to help the companies along the way automate their processes and fit into the chain as seamlessly as possible.”
Farrell said that developments such as the enhancement of SWIFT technology in Australia coupled with the affordability of cloud computing would help to build the business case for smaller organisations to automate.
“One of the problems to date has been that large scale software has needed to be deployed, but that is not the case with cloud,” said Farrell.
“This now opens up the opportunity for smaller organisations to use this without huge capex expenditure.”
DST’s Harries said organisations were looking to build a business case around automation which delivered “payback in six to nine months.”