Corporate Actions Automation in Continental Europe

by Cubillas Ding,  David Easthope, December 14, 2006

Abstract

Paris, France 14 December 2006

Despite efforts to automate corporate actions processing, most Continental European financial firms continue to have challenges processing events.

Across Continental Europe, corporate actions automation is rising in priority at banks, custodians, and asset management firms. However, most firms continue to have challenges processing events easily and accurately, according to the Celent report, .

"Continental European firms face sizable obstacles to achieving full STP of corporate actions," says Cubillas Ding, senior analyst at Celent and coauthor of the report. These include: nonstandardized data quality, disparate internal systems, fragmentation in communication of information among multiple parties in the chain, the rise in complexities associated with cross-border processing, and prohibitive costs. Continental Europe also faces specific challenges associated with continued reliance on manual activities, siloed operations for equities, and divergences in payment mechanisms at both the national and firmwide levels.

"However, emerging drivers and demands by regulators are providing an impetus for many of the obstacles to be overcome", says David Easthope, analyst at Celent and coauthor of the report. These include: an increased emphasis on corporate governance and operational risk management, staffing challenges, clearing and settlement harmonization efforts, convergence towards a single European payments zone, and the emergence of offshore destinations, where banks have the opportunity to consider a greater use of corporate actions automation.

As a result, greater attention and spending will occur in this market. Celent estimates that total spending on corporate actions solutions in 2006, both internal and external, will be just over €200 million. Currently, most banks and asset managers favor in-house development, with in-house spending accounting for 75% of total spending, though this is expected to decline to 55% by 2010. As a result, spending on third party services is expected to increase from €46 million annually to €113 million by 2010, a five year compound annual growth rate of 20%. By 2010, Celent predicts over €30 million of annual spending for corporate actions data scrubbing services.

 

The report is 35 pages and contains eight figures and five tables. A table of contents is available online.

 

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

Paris, France 14 December 2006

Executive Summary 3
Introduction 5
Automation Drivers 9
Barriers to Automation 13
Industry Practice by Country 17
  France 17
  Germany 17
  Luxembourg 18
  Switzerland 19
Market Opportunity 23
Vendor Market Opportunity 30
Conclusion 32
Objectivity and Methodology 33

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