Back-office coming to the fore

By Advent Software

In these days of trading sophistication, market volatility and heightened risk, the emphasis on operational efficiency is propelling back-office systems to the forefront of investment managers’ best practice requirements. Yet implementation of robust, functionally-rich platforms remains patchy across the Middle East. Many investment houses still rely on rudimentary self-built systems, often based on Excel spreadsheets.

And while investment management subsidiaries of large banks may have more sophisticated infrastructures, frequently they are in-house built or legacy systems that lack the functionality to support today’s trading environments. Increasingly though, a comprehensive best-of-breed platform, incorporating integrated portfolio management and reporting capabilities, is essential.

For example, in recent years various electronic exchanges have been established in the region. But most were designed to support a retail model with pure beneficial ownership, with the exchanges also providing the custody function, rather than independent custodian banks acting as intermediaries. As a result, wealth managers need direct connectivity to the exchanges, with systems to handle reconciliations and reporting.

Saudi Arabia is a case in point. The granting of more banking licenses has led to new investment houses being created to cater to the large pool of high net worth individuals. However, because there aren’t the custodians to shoulder much of that operational burden, wealth managers require sophisticated technology capabilities that span portfolio management, supply of net asset value calculations of funds, shareholder registration, and coverage of all asset classes including private equity and real estate if they are to succeed there.

Likewise, for wealth managers across the region success will depend on the quality of their client service. Add in stricter compliance requirements, including better management of operational risk, and it is clear that those wealth managers that invest today in the tools to control their costs and risks, and provide exemplary client service, will be the success stories of tomorrow. www.advent.com +971 4 3199 089.