SimCorp, a leading provider of investment management solutions and services for the global financial services industry, today released a new white paper titled “Globalization of Investment Management Firms - Overcoming the challenges of entering new markets.” The paper discusses some key considerations for investment managers in the process of globalizing their operations, with particular focus on the role of IT and operating model.
Although globalization is not a new trend, its relevance to the investment management industry is growing. With growth rates of up to 10%, emerging markets have become increasingly popular, and any firm not thinking globally risks missing out on new revenue streams.
Among other issues, the paper highlights the challenges of going global, including cross-border trading and clearing in securities, derivatives and foreign exchange. Furthermore, asset managers are faced with additional costs, complexity and time-to-market delays when adding foreign securities to client portfolios, not to mention the challenges of real-time support of multiple time zones, understanding of local trading and clearing practices as well as complying with local regulatory requirements.
The white paper argues that in order to benefit from globalization, investment management firms need to adjust their operating model and make sure it is supported by the underlying IT architecture. When dealing with issues such as connecting multiple markets and counterparties, and supporting several currencies, languages and tax regimes, the paper highlights the importance of a firms’ IT system in supporting a global operating model. Whether one decides to outsource, acquire, setup a local branch, or manage operations from headquarters, the IT system acts as a key enabler.
The paper concludes that with no one-size-fits-all approach to globalization, firms need flexibility to service their needs on a case-by-case basis across all aspects of an operating model. To deal with the high degree of complexity involved in managing global operations, only an agile and integrated IT system can support new processes and organizational stretch so that firms can operate on a global scale.