NYU Stern Professor: Investment Management Firms on Legacy Technology Less Competitive
Systems prohibit timely launches of new investment products and hinder firms from keeping pace with regulatory demands and innovation
NEW YORK--(BUSINESS WIRE)--SimCorp, a leading provider of investment management solutions and services for the global financial services industry, has published a new white paper, titled “Catalyst or Catastrophe: The Impact of IT Systems on Sustainable Business Performance.” The paper, authored by Ingo Walter, Seymour Milstein Professor of Finance, Stern School of Business, New York University, is part of an ongoing series of industry thought leadership compiled and published by SimCorp.
“Firms face significant challenges in today’s environment; fees are being squeezed by investors, reporting demands are increasing, and strategies and asset classes are growing more complex. These factors all reinforce the pains of being on a legacy system”
In the paper, Walter draws from a multitude of recent research to establish the clear relationship between the state of a firm’s investment management technology and its future business health. IT infrastructure, Walter writes, has emerged as a major source of competitive advantage in today’s product-saturated, high volatility and low return atmosphere.
All the findings quoted in the paper, including a survey of banking and investment managers in Europe, a poll of investment managers in North America and research by Lindbergh International, indicate that a significant proportion of buy-side investment managers rely on outmoded core systems, many of which bear the characteristics of the typical legacy system. Defined as inflexible, outdated and composed of a patchwork of disparate technologies, these systems severely limit product and business development while increasing risk. Across all of the research, the firms cite the same key issues, regardless of size or region. These include:
- An affected ability to accelerate growth
- Struggling to bring new products to market quickly
- The inability of existing systems to support regulatory changes
- The inability to record all events in the transaction life cycle or to support the entire book of business
- Data reconciliation errors and inconsistencies
- Days to determine exposures
Even in the face of these significant risks, legacy systems are still ubiquitous five years after the financial crisis; over a quarter of firms polled globally continue to run their core operations on such systems.
“Firms face significant challenges in today’s environment; fees are being squeezed by investors, reporting demands are increasing, and strategies and asset classes are growing more complex. These factors all reinforce the pains of being on a legacy system,” states David Kubersky, President and Managing Director, SimCorp North America. “Professor Walter’s paper thereby confirms what we see when dealing with global investment managers – to be truly competitive you need a modern, state-of-the-art system.”
To download full poll results, as well as a copy of the paper as featured in the latest SimCorp Journal of Applied IT and Investment Management, please click here.
Since 1971, SimCorp has been providing investment and portfolio management software and services to the world’s leading investment managers, asset managers, fund managers, fund administrators, pension funds, insurance funds and wealth managers. SimCorp’s world-class software provides global financial organizations with the tools they need to mitigate risk, reduce cost and enable growth. SimCorp is a global company, regionally covering all of Europe, North America and Asia Pacific. Listed on the NASDAQ OMX Copenhagen, SimCorp is dedicated to supporting the global investment management industry, its clients and its investors. For more information about SimCorp’s products, please visit www.simcorp.com/product.