The investment management industry is struggling to adapt to new demands as they continue to use outdated IT systems, according to an investment management solution firm.
A report by SimCorp found asset managers are putting their investments at risk and the industry’s reputation on the line as they are not investing in new systems as project length often surpasses the typical term served by a chief information officer making ‘rip-and-replace’ a last resort.
The reported noted the volume of trading data is growing by an average of 60 per cent every year.
SimCorp chief executive, Klaus Holse, said “the frenetic pace of change in the industry is not conducive to continued usage of legacy systems”.
“Firms run the risk of discovering that their IT infrastructure becomes a Gordian knot that becomes too difficult to untangle. Legacy systems were built for simpler processes and simpler times,” he said.
The report found over 50 per cent of financial services executives indicated that their IT infrastructure dated from 2007 of earlier, over 60 per cent of asset managers invest in technology to increase operational efficiency, and 80 per cent of financial services institutions’ IT budgets are spent on maintenance and workarounds rather than improvements.
Holse noted that regulators in the US and the UK were issuing fines last year linked to inadequate IT systems.
