Strategic advisory and analyst firm Aite group and software and IT services provider SunGard conducted a survey involving 58 senior executives at institutional asset management and asset servicing firms across North America, Latin America, Europe, Africa and the Asia-Pacific. 

The research showed that as firms diversify into new products, instruments and territories, achieving operational effectiveness while meeting new demands on data, risk management and reporting has become challenging. 

The survey said that while expanding globally into new geographies can potentially offer greater returns it can also create operational complexities. 

The findings of the survey showed the top business challenge today is the “increasing regulation and the challenges of aggregating data”, with 68 per cent of respondents ranking this as the most significant challenge. 

The US Foreign Account Tax Compliance Act was considered to be the most challenging of all regulations by 51 per cent of all respondents.

This was followed by the Alternative Investment Fund Managers Directive, at 44 per cent of firms. 

A global approach remains important to firms, however, with 78 per cent of firms regarding better support for their global client base as a critical goal for the next 12 to 18 months. 

Enhanced operational controls and increased efficiency through automation were the two most important goals for middle and back-office operations for 83 per cent and 81 per cent of firms respectively. 

The survey also found 62 per cent of firms consider “better support for data aggregation” an important goal of their middle to back-office operations over the next 12 to 18 months. 

Over half the surveyed firms viewed their data for risk management operations as either “fairly immature” or the “least mature”, with 42 per cent anticipating they will require data management solutions in the next three years. 

Aite Group senior analyst Denise Valentine said many firms who put technology purchases on hold during the financial crisis are now “resuming enhancements to their fund accounting systems and associated middle and back-office solutions, with the desire to become more efficient, automated, accurate and service-orientated. 

“Given the many changes to market and industry infrastructure in recent years, it is hardly surprising that organisations are still grappling with core operational issues,” said Ms Valentine. 

The improvement of efficiency and automation is an ongoing process that, as challenges continue and new lessons are learned, will need to constantly evolve.”