John Brogden

The financial services industry must focus on innovation to drive productivity and economic growth, John Brogden, CEO of the Financial Services Council said yesterday. Speaking at the launch of the 14^th annual FSC-DST CEO Survey Mr Brogden said over the past three years the financial services industry has focused nearly one hundred per cent of its time and resources implementing processes to comply with new regulation.

“It is critical that the industry moves on from regulatory reform to focus on what it does best – providing new and innovative solutions and products to clients,” Mr Brogden said.

“As Australia’s largest industry, financial services has the tremendous opportunity to innovate for competitive advantage. Whether it’s developing a product for small investors saving for retirement through superannuation or a major superannuation fund looking to develop globally diversified products, Australia has the skills and resources to be a significant player on a global scale.”

“Growth through innovation will increase productivity and will have a flow on effect to the economy,” he said.

Rhys Octigan, Regional Head of Business Development for DST Global Solutions in Australia and New Zealand said: “The survey makes it clear that as financial service firms move beyond addressing mandatory regulatory requirements, the difference between the leaders and laggards of tomorrow will be their strategic versus tactical view of technology spend today.”

“Leading firms are already identifying new and strategic ways to leverage their investments in compliance to create innovative projects that will provide competitive differentiation in the future,” says Mr Octigan. “The right technology will provide these firms the ability to develop fast, effective ways to service customers and streamline front- and back-office processes.”

Mr Brogden added: “Innovation is important for the industry because financial services is a driver of innovation in the wider economy through the investments it makes.

He said financial services is unique in being almost entirely self-sufficient with little use of government-funded programs. “It is a funder of innovation through its relationships with universities and the investment it makes.”

This year, 50 of the FSC’s 73 member CEOs participated in the survey which captured their views on the issues and challenges their businesses are facing in Australia. The key industry-related message that emerges from the survey is that the sector is aware that it needs to restore trust and improve its long-term sustainability to meet the needs of clients though their working lives and into retirement. However, the sector is still affected by regulation fatigue as the FoFA, MySuper and SuperStream changes continue to be bedded down. The special topic explored in this year’s survey is innovation – both within in the financial services industry and the role the sector plays in supporting innovation.

Key Survey Findings

• 82%  say the use of client data will improve products, increase customer service and contribute to their strategic thinking
• 77% of CEOs think the financial services sector needs to do more to meet the needs of retirees
• 75% say innovation in their firm is mainly focused on finding ways to increase revenue
• 73% think technology is a key enabler to deliver innovative financial services products

Top Three

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David Rhind

DST, a global provider of strategically unified data management, business processing, and customer communication solutions, today announced strategic enhancements to its Anova product suite designed to provide global asset managers increased visibility of intraday positions and valuations to help drive investment decisions.

Anova’s new functionality, referred to as an Investment Book of Record (IBOR), addresses the need for buy-side firms to consolidate real-time positions.

A recent report DST Global Solutions’ commissioned with Aite Group indicated a growing need for asset managers to have data updated intraday in order for front offices to have accurate information across regions and asset classes.

According to Julian Webb, Head of Data Management and Analytics at DST Global Solutions, there is an increased market appetite for flexible IBOR solutions that can function independently of both front and back office solutions.

“IBOR is not a one-size-fits-all concept and we recognise the varying challenges global firms are facing when implementing this kind of solution,” says Webb. “The ability to visualise positions across asset classes and regions intraday is essential for firms looking to have better information on which to base their investment decisions.”

Anova IBOR consumes transactions and events in real-time from multiple sources and provides asset managers with improved visibility of their investment positions, including:

• Enterprise –wide view of positions and valuations that is continuously updated
• Positions that reflect all trading activity and business events
• Decomposition of positions according to position state
• Ability to forecast positions into the future
• Ability to view positions at prior dates

“To function effectively in a complex systems environment, where an investment manager may have multiple order management systems and more than one outsourced provider, IBOR has to be truly independent of the front and back office,” says Webb. “We believe that Anova IBOR is one of the few solutions designed specifically for this scenario.”

DST Global Solutions will be participating in the IBOR panel at WatersTechnology’s inaugural Buy-Side Technology Asian Summit 2014 being held today in Singapore. Additionally, DST is participating in a joint European and North American webinar focusing on IBOR, also taking place today.

Australian commentary

David Rhind, Solution Manager, Anova Performance, Asia-Pacific at DST Global Solutions, said, “The concept of having a continuously updated view of complete and accurate position information is not new, but it’s not easy and arguably it has got more difficult in recent years as the nature of the investment management business has evolved. The frequency of trading by some investment managers has increased enormously in recent years, as has the complexity and the breadth of instruments traded. Added to this, the fragmentation of exchanges, markets, IT systems and the multiple outsourcing arrangements is now commonplace, making it like a jigsaw puzzle to piece everything together to see the complete picture.

“Many Australian asset managers, servicers and owners managing global mandates experience time zone challenges and operational issues associated with managing a global model, making it difficult to accurately deliver aggregated cash and stock positions both current and forecast.  Anova IBOR helps provide them with a crystal clear view of their positions throughout the entire investment lifecycle.

“Additionally, firms who have outsourced their operations are at risk in the event of failure at the outsourcer. Having an IBOR acts as an insulation layer allowing the organisation to change outsourcers more easily by preventing lock-in to a single provider.

“Knowing aggregated exposure to asset classes, geographies, brokers, counterparties – or any entity – is increasingly being required by organisations and being able to calculate that exposure quickly is increasingly seen as valuable to meet client transparency, risk mitigation and drive sales,” Mr Rhind said.

Anova IBOR is now available on general release.

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David Rhind

Australia’s superannuation sector is increasingly turning to technology driven solutions to harness the value of investment data according to David Rhind, Anova Solution Manager, Asia-Pacific with DST Global Solutions.

Speaking at a recent DST Global Solutions breakfast briefing in Sydney, Mr Rhind said the increasing complexity of investment operations of Australia’s superannuation sector has meant that those organisations who take a strategic approach to the management of their investment data will gain tangible business benefit, over and above mandated regulatory compliance.

“Accessing accurate and timely data is relatively straightforward when it’s low volume or from a single source. Where organisations struggle is the growing requirement to collate data across multiple sources and achieve greater granularity, as we are seeing with the Stronger Super reporting. It is here that an effective investment data management technology is a distinct advantage.

“Tactical responses are perfectly valid to meet specific regulatory demands but essentially this does not move the business forward.”

According to Mr Rhind, organisations are finding more innovative ways to better manage investment data in order to gain competitive advantage and return benefits to members and stakeholders.

“Effective investment data management can dramatically improve operational efficiencies, investment option decision making capability, as well as greater transparency.

“We are finding that many financial organisations that initially engage with us to resolve mandated regulatory requirements, are identifying wider, strategic business benefits they can obtain by leveraging their initial technology investment,” he said.

“Technology driven solutions, like DST’s Anova, delivers a market leading combination of investment data management components and analytics engines to help organisations make sense of complex information for insightful decision-making. Super funds can use the data for regulatory reporting, post-trade compliance and position keeping or bolster an organisation’s Investment Book of Record (IBOR). In such a competitive landscape, this is a tremendous advantage,” said Mr Rhind.

Anova is utilised by more than 40 firms globally with assets under management ranging up to $3 trillion.

Keynote speaker at the breakfast briefing, John Brogden, CEO, Financial Services Council said Australia’s superannuation sector is working well and delivering huge benefits to the Government and the Australian financial system however, questions are increasingly being asked about the slow adoption of technology in the sector.

“By and large the superannuation sector is effectively allocating capital back into the Australian financial system. Australia’s savings rate is three times higher than it would have been without superannuation. Today, Australia’s superannuation sector is worth $1.8 trillion, it will move to $3 trillion in 2025 and to $5.5 trillion by 2030,” Mr Brogden said.

However, some things could hold back the growth of the sector, including the slow adoption of technology by wealth managers, including super funds, Mr Brodgen said.

“Our industry hasn’t positioned itself to fully take advantage of technology. However, this is changing as super funds want to remain innovative and competitive.

“Over the past few years, the super industry has been focused on compliance. This focus is shifting to innovating through technology,” he said.

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David Rhind

DST Global Solutions, a market-leading provider of technology solutions for the investment management industry, yesterday announced the appointment of David Rhind, Solutions Manager, Anova Performance for Asia-Pacific.

Mr Rhind is responsible for driving and managing the growth and development of Anova Performance, a software solution that is designed to deliver sophisticated performance measurement and attribution, in the Asia-Pacific region.

Mr Rhind has 25 years’ experience in financial services and has held roles in Australia, the Middle East and UK for well-known fund managers, asset servicers, sovereign wealth funds and buy-side focused software solutions providers. Mr Rhind will be based in DST’s Melbourne office.

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DST further invests in automating fund accounting and tax processing capabilities for asset-backed and mortgage-backed securities in HiPortfolio®

Rhys Octigan

DST Global Solutions, a market-leading provider of DST Global Solutions for the investment management industry, says the latest data on total assets under custody for Australian investors highlight the need for asset managers and asset servicers to have scalable technology solutions in place that efficiently manage this huge and growing asset pool.

Data released this month show that total assets under custody for Australian investment firms rose 8.3% between June 30, 2013, and December 31, 2013, to $2.3 trillion. Of that total, $1.7 trillion were Australian assets (up 8.4% over the period) and $647 billion were international assets (up 7.4%).

Rhys Octigan, head of business development, Australia & New Zealand for DST Global Solutions, said, “As investor assets under custody climb higher, driven by rising asset values and superannuation inflows, custodians and investment administrators need to have the right technology solutions in place to process this huge pool of assets with speed, accuracy and reliability. True scalability cannot be achieved by simply throwing man hours at a problem, and consequently, technology that enables straight-through-processing of even the most complex asset classes is now seen as an essential component in winning new mandates and onboarding new clients.”

Processing over 70% of investment transactions in the Australian market, HiPortfolio, DST’s investment accounting and asset servicing solution, has over 18,000 man days of R&D invested annually to help investment management firms automate end-to-end processes, increase efficiency and reduce operational risk. The drivers are two-fold: to ensure investment accounting and administration technology supports new products and services from asset servicers; and to optimise investment operations.

The huge pool of assets in Australia create capacity challenges, so investors are diversifying by turning to more complex financial products and alternative investments to drive returns and, as a result, investment accounting and administration technology needs to adapt to be at the forefront of this shift. For example, as part of a five-year recommitment, DST recently helped one of Australia’s largest custodian banks to develop automated fund accounting and tax processing capabilities within HiPortfolio for asset-backed securities (ABS) and mortgage-backed securities (MBS), the first custodian in the market to launch this new service to institutional investors.

The new capabilities in HiPortfolio support a variety of domestic and international ABS and MBS, as well as compounding-interest and inflation-linked swaps, while complying with Australia’s complex tax requirements including Tax on Financial Arrangements (TOFA) calculations.  This helps significantly improve reporting abilities by the custodian to its clients and provides more transparency to better evaluate investment decisions.

“The demand for more sophisticated technology to meet regulatory and client requirements means it’s time for asset servicers to assess where upgrading or expanding their use of their IT system can achieve efficiencies to boost productivity and gain a competitive advantage to win new mandates and clients,” Mr Octigan said.

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