Financial Tracking Technologies LLC released the results of its annual Costs of Compliance and Risk Benchmarking Study 2012. Key facts of the study showed that, even though highly affordable automated solutions exist, over 80% of risk and compliance tasks are still being performed manually and costs of risk and compliance are going up at 40% of participants. Money managers, BDs and hedge funds globally could realize as much as $800 million in cost savings, and maybe more, from three primary sources:
• Automation of risk and compliance tasks heretofore performed manually,
• Vendor consolidation resulting in scale and scope pricing economies, and
• Outsourcing IT that develops and maintains traditional risk and compliance solutions.
The study was conducted with IA Week/IA Watch and BD Week and was administered during the months of March and April 2012. It included over 340 participants ranging in size from $100 million to $640 billion in assets under management. Forty percent of participants were dually registered as both money managers with an affiliated BD.
“Buy and sell side firms alike are under significant profit margin pressure. The study underscores the enormous cost savings opportunities for the entire street globally,” said Tony Turner, Principal, of the company. He noted that “though these opportunities exist, strategic decisions such as these should only be made after careful cost benefit analysis coupled with technology strategy. It’s not a spend money on a vendor approach but one of automation and cost savings with direct profit impact.” Turner said Financial Tracking Technologies LLC offers a comprehensive analysis at no cost that includes the strategic rationale to help C-level executives make such decisions.