Fund automation remains static as sales increase

Fund automationTransfer agents were unable to increase their automation rates for cross-border fund orders during a recent period of record sales, though they maintained a high level of automation in line with industry targets.

The level of cross-border fund orders that are automated or standardised remained static over the past year and so did the level of manual processes that the industry wants to eradicate.

However, the results of the latest industry study into process automation in the cross-border hotspots of Ireland and Luxembourg were welcomed against the background of record sales volume.

Peter De Proft, director general of the European Fund and Asset Management Association (Efama), said sales figures confirmed that 2017 “will be a record year in terms of net sales of investment funds”.

In the first half (H1) of the year, total order volume of cross-border funds increased by 13.3% to 19.5 million orders when compared to the last half of 2016. 

Data from 28 transfer agents – based on the second quarter (Q2) of 2017 – indicated that the automation rate across Ireland and Luxembourg reached 86.6%. By comparison, the final quarter of 2016 saw a rate of 86.7% – though that figure had represented a rise of 1.3% over the preceding 12 months.

Manual rates remained “stable” at 13.4% in Q2.

De Proft added: “The success of both Ucits and AIFs [alternative investment funds] reflects the investors’ interest in these products and the ability of fund managers to improve their competitiveness, notably by eliminating manual processes, which are costly and subject to operational risks.”

The latest data shows that Ireland had the higher rate of automation in Q2, at 90.6% compared to Luxembourg with 84%.

Efama gathers data about automation in cooperation with Swift, a messaging platform used by banks.

When Efama and Swift began their standardisation reports in 2009, the industry objective was to reach 80% automation of cross-border fund orders. The target is now 90%.

Fund automation at various levels is widely expected to be boosted by blockchain technology.

©2017 funds europe