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SimCorp Survey Exposes Weaknesses in Buy-Side Accounting Systems

  • Nearly one out of two respondents admitted that current accounting systems do not support their entire book of business
  • Strong recognition that centralizing data in a single accounting system increases accuracy and ease of client reporting

SimCorp, a leading provider of investment management software and services for the global financial services industry, today released the results of an investment accounting survey conducted last month. The poll exposed continued weaknesses in legacy buy-side accounting systems and widespread recognition of the value in centralizing position-keeping. The survey respondents included nearly 100 executives from 58 buy-side firms across Canada and the US.

The survey revealed that most firms still rely on legacy accounting systems that cannot comprehensively support their investment operations. Over 56% of respondents admitted that they were not confident that their current accounting systems could accurately record all the events in the transaction lifecycle, including those related to OTC derivatives. Nearly 45% of firms have accounting systems that are unable to support their entire book of business.

"Investment firms that struggle to collect the right data at the right time are missing strategic opportunities to drive their business forward," said Gert Raeves, research director at CEB TowerGroup. "Creating a central repository of critical financial data will allow firms to not only meet regulatory compliance goals, but to better understand their customers and implement effective enterprise risk management."

Despite the prevalent weaknesses in current accounting systems, the survey revealed that firms are thinking about moving to a centralized system for position keeping. Poll results showed that 91% of participants believed that position data should be consolidated in a single accounting system across their entire book of business to increase the accuracy and ease of reporting. The results validate that investment data should be accessed from a central 'location' instead of reconciling data from disparate systems which ultimately results in poor data quality that in turn impacts investment decisions.

Additionally, when asked in the poll to describe the consequences of inaccurate client reporting, respondents stated that loss of business and reputation, wrong investment decisions, loss of client confidence, inefficiencies with operational processes and ‘early retirement’ were top concerns.

David Kubersky, Managing Director of SimCorp North America, comments, “If there is anything that the recent accounting-related scandals have shown us – it is that improving record-keeping should be a top priority for firms. While it is encouraging to see that buy-side firms acknowledge the need to consolidate position-keeping in a centralized accounting system, it is time to convert belief into concrete action on the road to restoring investor confidence.”