Faced with budget cuts, staff shortages and growing demands from end clients, many financial institutions are beginning to consider outsourcing of client reporting functions. Simon Cornwell of Vermilion Software explains the recent developments in this space.
Q. Why are buy-side institutions considering outsourcing client reporting today? What are the drivers for these firms?
In my experience, there are two key challenges facing organisations in today’s market place that have acted as drivers in the shift towards the outsourcing of client reporting operations. Firstly, there is the need to tighten belts and achieve a reduction in head count, and secondly, people are starting to realise how technology can greatly benefit their company’s entire reporting operation. With ever-increasing demands in terms of transparency, personalisation and the timeliness of reporting, organisations are faced with two options, either employ more man power or embrace all that modern technology has to offer.
In the past, solutions providers have been unable to deliver the automation of the otherwise onerous manual tasks such as data acquisition, validation and rendering, whilst at the same time fully catering to the bespoke personalisation demands of an organisation’s clients. Reporting elements such as portfolio commentary and market reviews are often seen as a key touch-point and differentiator when it comes to client service, and organisations are understandably hostile towards any form of input from external sources in these areas.
The most successful solutions therefore are those that can efficiently manage these in-house obligations in a way that will make best use of an account manager’s time and resources, allowing them to focus on their core competencies. Security is of upmost importance when it comes to matters such as reporting data and content, and this is a particularly pressing issue when it comes to third party administrators, as the solution will need to deal with vast amounts of disparate and highly sensitive information.
Q. What are the advantages of licensing software and keeping client reporting in-house versus outsourcing?
There are a number of advantages and disadvantages in running your own system and licence in-house. The fact that the institution will have complete control over the production process is seen as a significant advantage over other alternatives, and this will allow a company to focus on improving their processes in the manner they see-fit, with the aim of reducing client reporting costs in the long-term. Institutions will also benefit from being able to rapidly respond to client requests and build new reports on the fly.
Q. What is the most significant trend or change affecting client reporting operations today and how can outsourcing help manage this trend, or not?
The most notable trend seen today in client reporting is the growing level of expectation from an organisation’s clients; common demands include both the level transparency and personalisation within reports, all delivered within a short timescale. This is leading organisations to invest in the latest solutions that have workflow tools and business user features imbedded within them, to pro-actively manage the end-to-end process of client reporting.
Users need to monitor and manage all aspects of the report including data, production and commentary writing. Bottle necks and data issues need to be detected at an early stage in the production cycle so that they can be resolved in a timelier manner. A solution that addresses these areas and offers business user controls will relieve the IT burden and allow for rapid responses to change requests within reports.
Q. If outsourcing of client reporting is a growth area, what do the third party administrators need to do to support this demand?
The outsourcing of client reporting is indeed a growth area, and being able to deliver a flexible offering, coupled with deep client reporting knowledge and experience is a key differentiator here. If any organisation, including third party administrators, is at an early stage in their research, then I would advise that they engage with a vendor who specialises in and fully understands institutional client reporting. Providers such as these can offer vital knowledge and expertise along with a strong, tried-and-tested product.
In my experience, the solution that would best meet the requirements of a third party administrator is one which offers a multi-tenanted system, delivering benefits in flexibility and scalability. Third party administrators will require a product that enables tenants to access the system directly for tasks such as commentary approval and sign-off, within a secure working environment. Third party administrators will also require a flexible workflow service with business user control features to deliver personalised reports in a timely manner.
Q. And finally, what recommendations can you offer to any firm looking to improve client reporting operations/services this year?
There are a number of recommendations that I would give to firms looking to improve their reporting operations. Firstly, buy – don’t build. The latter may often seem like a cheaper short-term option but there is in fact a vast array of hidden complexities that will come to the surface in this ongoing process. Investing in vendor solutions that have been vigorously tested will often result in a quicker time to market turnaround for the client, with some offering typical implementation periods of three to four months. By utilising a trusted solutions vendor, the client will benefit from the knowledge, experience and expertise of the supplier, and will often discover extra features / functionalities that were not previously considered in-house, resulting in increased client reporting efficiencies.
Finally, I believe that the flexibility of a system is a vital element in its relative success or failure. Users need to be empowered to produce any type of report, from simple factsheet production to complex institutional reports, all fully customisable and in any output; client’s have and will continue to demand reports in CSV, MS Word, Excel, PowerPoint, PDF and to web. Organisations should look to outsource from solution providers that can deliver these flexibilities.
* Simon Cornwell is director of sales and marketing at Vermilion Software. He is based in London.
