An option for anyone looking to flex their database and analytics skills for a bigger wage: the investment management industry. A recent report highlights that few Australian investment firms have systems that can cope with a flood of new global regulations designed to prevent future financial crises, instead relying on poorly-controlled spreadsheets.
Investment picture from Shutterstock
The report, Impact of Global Regulation on Australian Investment Managers, was based on interviews with local fund managers. One key theme that emerged is that while management firms are expected to comply with a range of global regulations and produce more detailed reports, but many don’t have back-end systems which can manage that.
“This will largely turn out to be a data management challenge for investment management firms, mainly because the regulators have been given new powers to demand new reporting and new data,” said Doug Neill, principal of Investit, which authored the report. An added challenge is that there’s no easy way to track the regulations required. “There is no central repository where compliance managers can go and find all this information.”
“A lot of this new regulation is driven by governments being seen to protect the investor and make sure we don’t have another financial crisis,” Neill said at a media briefing late last year. “The consequence of this is there’s no master plan. What it’s actually driving is that the regulation is going to be drip-fed into the market. With regulation you’re going to have to lift the bonnet on all the systems but you don’t know what you’re looking for.”
“IT is one of the biggest costs the investment industry has,” said Christian Eriksen, regional manager system solutions Asia Pacific at SimCorp, which sponsored the study. “There is a need for more of a centralized IT strategy, rather than the current disparate approach.”
“Our focus is very much on trying to centralise the IT landscape. The local industry is lethargic. They’ve been living in the hope that nothing will change. They’re screaming out for this because they can see the amount of work it’s going to take. Data management is absolutely at the top. There’s no way round it; they have to comply or they lose the ability to service clients in certain sectors.”
That doesn’t sound like a particularly pleasant career option, but it might be a lucrative one, especially given the basic nature of what’s currently used. “Excel is frighteningly too much in the mix,” Eriksen noted. “It is scary. Even some of our own clients just don’t understand the point of straight-through processing and automating things.
“It’s a cultural thing as well. They believe having a team of 100 people doing stuff in Excel is better for the manager’s image than having a team of 20 people because it’s creating jobs. In the local market you’ll see a lot of Excel in there. But there’s no security and no audit trail.”