There is an urgent need to automate corporate actions but challenges surrounding proprietary and legacy technologies, and data quality are standing in the way of progress.

Nearly 40% of respondents to a recent survey of financial stakeholders said they process more than half of all their corporate action messages manually, with nearly 50% saying legacy technology and infrastructure present the greatest challenges to automation in their organizations.

The survey was sponsored by SIX, a Switzerland-based company that develops and operates infrastructure services for the Swiss and Spanish stock exchanges; it questioned 55 stakeholders across the Asia-Pacific region, Europe and North America representing private and investment banks, wealth managers, asset management firms, insurance companies and clearing houses.

A lack of technical know-how and the resources to automate are a problem, according to 20% of the respondents. Not having enough support from data/technology providers is an issue, according to 18.2% of the respondents. The lack of clarity around the business base, was also said to be an issue. And, a few respondents noted that not knowing where to even begin automating processes is a problem.

These concerns illustrate just how great a task automation presents for financial institutions.

Despite the challenges respondents said they want to push ahead to automate for a variety of reasons: to reduce operating costs, cope with growing volumes of data, generate insights into data and improve the quality of client services. Stakeholders noted automation would help them better respond to regulatory and compliance rules. Reducing reputational risk and losses incurred on corporate action processing was noted as another driving force behind the desire to automate.

Some of the key takeaways from the SIX report:

• A large percentage of corporate actions are still being processed manually due to poor and insufficient supporting technology and data;
• Decommissioning legacy applications and technologies is seen as “too onerous and impractical”; and
• The financial industry is, despite the challenges, moving in the right direction when it comes to technology.

Meanwhile, the role of data remains paramount, with respondents noting that data quality and timeliness are important to maximizing the automation of front- and back-office operations, and to managing the growing volume of corporate action events while also minimizing the risk of data errors.

Stakeholders also state in the survey that market participants are looking for additional details around their corporate actions, especially when it comes to equities and fixed income, with Europe and Asia-Pacific requiring the most information.

Financial institutions are also looking for real-time delivery of corporate action messages and data information; without this, intraday delivery of messages roughly three or four times per day is needed.