The Challenges of Cost Management for Brokers and Asset Managers

Written by

Rupert Booth

Published on

Insights

Broker-dealers and asset managers are facing extensive challenges in today’s capital markets. Accordingly, many are now looking to streamline their operational processes and obtain meaningful cost savings.  A more intelligent approach to invoice management could be one of the ways for these financial institutions to generate greater efficiencies. Moving to truly integrated solutions where account databases can ‘consume’ invoices and overlay them with fee schedules, is the way forwards.

An industry navigating a tough market environment

Brokers and asset managers are in the midst of some difficult market headwinds – fuelled primarily by unprecedented volatility and soaring inflation. At the same time, institutional clients – who are themselves dealing with mounting cost pressures  of their own – are becoming increasingly sensitive about the fees which they pay to the sell-side.

Compounding matters further is that these institutions’ operational costs are also spiralling upwards. This has been happening for a long time now – arguably since the financial crisis – but financial institutions are being forced to invest more heavily into non-revenue generating activities, such as business continuity planning (BCP) and cyber-defence, especially in the aftermath of COVID-19.

If firms are to thrive in these tough market conditions, then they will need to optimise their operations. So how can this be done?

Finding efficiencies

Invoice management is fraught with challenges when conducted in-house. Not only does it take time and effort for financial institutions to build up the correct infrastructure, but it can also be very expensive (well into the millions of dollars). For smaller institutions, such costs are simply not sustainable in this environment. 

Moreover, many systems being leveraged by brokers and asset managers are often behind the curve in terms of their development, meaning they are constantly in need of new updates and upgrades.

This ultimately increases the risk of inaccuracy, an increase in recurring errors and ultimately scope creep, something which can lead to firms incurring added and unnecessary costs.

Increasingly, brokers and asset managers are turning to software providers, such as ourselves at MYRIAD Group Technologies Limited, to support them with activities like invoice management. As a single platform, MYRIAD™ enables clients to move away from a siloed operating model, allowing them to access information in a centralised location and facilitating significant operational and commercial cost savings.

MYRIAD™ brings together an inbound invoice with an established fee schedule and matches internal volumes with the same fee schedule, identifying the deltas and tracking for remediation and audit purposes. Issuing the payment instruction internally and feeding or informing the corresponding outbound invoice calculation with a handshake with MYRIAD Embus™, our Client lifecycle platform, completes the billing circle.

The savings from leveraging this technology are impressive. For instance, one of our clients saved $400,000 within six weeks of starting their project, effectively covering the first two years of their license, through identifying billing errors stretching back several years.

MYRIAD™ currently processes invoices across 200 Agents in over 65 markets.  Our functionality provides high levels of automation and can reconcile invoices on an account-by-account, category-by-category, or item-by-item basis. MYRIAD™ can process a Euroclear invoice in seconds.

The single platform approach means that brokers and asset managers can report on any datapoint within the platform and reports can be configured to run whenever needed – and primed to be delivered to whoever needs them, wherever they are. Through MYRIAD™ and MYRIAD Embus™, broker-dealers and asset managers can consolidate what it costs to service a client – namely network costs – together with what they need to bill clients. Such insights are invaluable for financial institutions.

At a time when revenues at broker-dealers and asset managers are under significant pressure, obtaining efficiencies in these back-office processes are crucial.  As part of MYRIAD™’s Next Gen programme, we are augmenting our existing functionality even further to provide more processing efficiencies and automation, focussing on exception management and ingestion of non-structured data. Coupled with our robust stance on security and ISO27001 accreditation, the advantages of the MYRIAD™ suite of products become all the more compelling.