Asset owners require comprehensive oversight of their investments to manage and report on risk and return profiles. This critical reporting provides regular updates to executives, governing boards, regulators and stakeholders in a manner that is easily understood by all. As investment strategies increasingly become more complex, compounded by elevating geopolitical risks and rising reporting demands, technology can play a pivotal role in ensuring asset owners’ reporting capabilities keep pace.
Formal stakeholder reporting was introduced a few decades ago and nuances exist across the asset owner landscape. To further explore how reporting has evolved, BNY Mellon examined the internal stakeholder reporting of 50 global asset owner clients and found interesting variations in terms of asset owner type and region. These include:
While variations exist in the reporting requirements and production processes, the data requirements are consistent across asset owners. Data is mainly ex-post and combines investment accounting, performance, risk and compliance metrics. Forward looking ex-ante views are rare. The following data points are common in most reporting:
Based on the research, there are four key challenges to stakeholder reporting. These include:
In addition, the following observations were made:
Combining these observations, asset owners could face daunting challenges when asked to deliver more frequent and digitally native reporting, when the data foundation is not aligned to support. Unsurprisingly, “Data analysis/quality tools” was flagged as the most important item by asset owners in what they consider key to helping improve their daily reporting analysis tasks (see Figure 1).
In addition, asset owners revealed that “New Investment Reporting Needs” is their top reporting priority over the next three to five years. They are specifically looking for additional reporting data sources such as economic, actuarial and liquidity data, as well as graphical presentations and flexibility. “Data Exploratory Analysis Capabilities” and “Connectivity to Third-Party Business Intelligence Tools” are the other two top reporting priorities that asset owners are looking for (see Figure 2).
Figure 2: What are your top three reporting needs for the next 3-5 years?
Asset owners face rising data challenges associated with content, complexity and timing. To cope with that, they are adopting new technology either directly or through their outsourced service provider across three levels:
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