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AIM Survey: Financial Institutions Struggling with Regulations and Realising Efficiencies

11-24-2006 05:51 PM CET | Business, Economy, Finances, Banking & Insurance

Press release from: AIM Software GmbH

Major challenges for banks continue to be reference data management and risk management

VIENNA (Austria) – According to a new survey undertaken by AIM Software, the financial industry continues to struggle with compliance with regulations, including Basel II, MiFID (Markets in Financial Instruments Directive) and the Sarbanes-Oxley Act. AIM Software’s study was designed to provide insights into the driving forces, challenges and planned investments for reference data automation and risk management. The survey was sponsored by FT Interactive Data, an Interactive Data (NYSE: IDC) business, and a leading supplier of financial information to global markets.

The findings of this year’s survey reveal that improving reference data quality is regarded as a key issue for risk management and that regulatory requirements are increasingly strongly driving investments in IT. Companies now pay more attention to the challenges of Basel II (which enters into force in Europe in 2007) and the Sarbanes-Oxley Act of 2002.

Regulations apart, the surveyed companies are also focusing on reducing errors and costs associated with back office workflows through improved straight through processing (STP). This year 53 per cent of the survey respondents named improved efficiency as an important driving force for implementing a risk management solution, suggesting that risk management is no longer considered only as a cost but also as a benefit.

Martin Buchberger, head of Marketing at AIM Software, states: "Financial institutions are beginning to realise that investments in reference data management and risk management can help to reduce not just the risks but also the costs. The surging investments in the back office are proving a drastically changed agenda and are a sign of the silent revolution in the back office that started some years ago.”

Buchberger adds: “The results show that companies see the close interdependence between high quality reference data management and efficient risk management.” The fact that 37 per cent of companies are planning to invest in the automation of reference data within the next two years underlines this finding.

The focus in reference data management lies on the automation of static data and the processing of corporate actions data, the areas from which the largest costs originate. Twenty-six per cent of the 1,027 respondents plan to increase their levels of automation for corporate actions. “Companies realise that they could face serious operational risk and huge losses in this area. Corporate actions are one of the least automated and therefore one of the most labour-intensive, error- and risk-prone areas,” states Graham Parry, manager of FT Interactive Data’s European Business Development Group.

The predominance of proprietary reference data management solutions has reduced significantly since this area is no longer regarded as an internal core competency of an institution's IT department. Although 22 per cent of the companies interviewed still rely on proprietary solutions, the number of companies preferring to buy a data management solution grew from 19 per cent in 2005 to 22 per cent in 2006. One reason for this trend might be the wider range of standardised data and risk management solutions now available on the market and the associated increased awareness of such solutions.

In addition, institutions are aiming more and more for better implementation of standards for the delivery of reference data. Worldwide, 11 per cent of the survey participants are already using ISO 15022 to a greater or lesser extent.

“Our research activities are giving an in-depth insight into global trends and developments in the financial industry. However, the efforts in reference data management and STP obviously have to be synchronised with those in risk management in order to reap the most benefit out of back office investments,” concludes Buchberger.

The findings of the survey can be downloaded for free at http://www.dmstudy.info/2006.

About the AIM Global Data and Risk Management Survey 2006
The survey was conducted by AIM Software for the third consecutive year and was sponsored by FT Interactive Data. The sample included 1,027 respondents in 77 countries who were interviewed on their plans regarding reference data and risk management, the handling of regulatory requirements and their standardisation efforts.

About AIM Software
Established in 1998, AIM Software (Advanced Information Management Software) is one of the leading providers of reference data management and risk management solutions for financial markets with offices in Switzerland, France, the USA, Hong Kong and Japan and which services more than 95 clients worldwide. AIM Software operates on an international scale and is active in the major financial centres based on its worldwide service and support partner network. Supported by the company's expertise in the areas of reference data management, risk management and financial instrument pricing, the creation of leading edge software solutions is the cornerstone of AIM Software's success. For more information, visit http://www.aim-sw.com.

About Interactive Data
Interactive Data Corporation (NYSE: IDC) is a leading global provider of financial market data, analytics and related services to financial institutions, active traders and individual investors. The Company’s businesses supply time-sensitive pricing, evaluations and reference data for more than 3.5 million securities traded around the world, including hard-to-value instruments. Many of the world's best-known financial service and software companies subscribe to the Company's services in support of their trading, analysis, portfolio management and valuation activities. Through its businesses, FT Interactive Data, ComStock, CMS BondEdge and eSignal, Interactive Data has approximately 2,200 employees in offices located throughout North America, Europe, Asia and Australia, and is headquartered in Bedford, MA. Pearson plc (NYSE: PSO; LSE: PSON), an international media company, whose businesses include the Financial Times Group, Pearson Education, and the Penguin Group, owns approximately 62 percent of the outstanding common stock of Interactive Data Corporation.

FT Interactive Data provides global securities pricing, evaluations and reference data designed to support financial institutions’ and investment funds' pricing activities, securities operations, research and portfolio management. FT Interactive Data collects, edits, maintains and delivers data on more than 3.5 million securities, including daily evaluations for approximately 2.5 million fixed income and international equity issues. FT Interactive Data specialises in ‘hard-to-value’ instruments and ‘hard-to-get’ information from emerging markets.

Evaluated pricing is provided in the US through FT Interactive Data Corporation and internationally through Interactive Data (Europe) Ltd. and Interactive Data (Australia) Pty Ltd.

For more information, please visit: www.interactivedata.com

For further information please contact:
Gerlinde Pachinger
PR & Communications
Tel: +43 1 5124652-228
pr@aim-sw.com
http://www.dmstudy.info/2006

AIM Software GmbH
Gonzagagasse 16/5, A-1010 Vienna
Tel: ++43-1-512 46 52
Fax: ++43-1-512 46 520

AIM Software offers reference data and risk management software (Basel II, market, credit, operational) for managing static data + corporate actions

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