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By Denise Bedell-Bleeker
When it came to investing excess cash during the financial crisis, most companies turned to the safest investments-Treasuries-as long as they could get them. The idea of investment income went out the window and companies simply looked for a safe haven.
At the same time, many CFOs took a much greater interest and involvement in the investment management process, and had their companies revamp the risk and due diligence procedures surrounding the process. That had many investing in new or better systems for trade analysis and management at a time when most corporate IT budgets were shrinking.
Even so, corporates continue to be plagued with the same problem that has always been an issue, namely, the lack of a system designed specifically for them.
Because corporate investment managers account for such a small segment of the market, most system suppliers focus rather on big institutional investors and hedge funds and assume that companies can make do with those systems. But corporate investment management is quite different.
For starters, their risk profiles are quite different, and that means they need different scenario analyses as well. Then there are their compliance requirements, which are poles apart, and that means different tools for compliance management. And the tools must be integrated into their systems for planning and forecasting, etc. The list goes on.
Yet there is still no one system that can handle front, middle, and back office corporate investment functions. As a result, company often still manually upload investment data from the front to middle to back office, which makes the job of the investment team quite time consuming.
For example, cash balance information is difficult to get to flow through systems. So many firms end up doing it manually by taking data from their trade and scenario analysis system into Excel.
Also, many companies have to run a number of systems to cover all the bases - for example using CreditSights or CapIQ for credit research and Clearwater Analytics for compliance and risk management.
Here, however, there's cause for hope. Bloomberg is now connecting with the SWIFT system that tracks fixed-income data electronically, which should help companies integrate data.
Meanwhile, some analytics providers are willing to develop workarounds for data integration issues. This, however, is so expensive that few corporates can even consider it.
So until one of the analytics providers decides to tailor a system specifically to the needs of corporates, CFOs and their investment teams will find this area of corporate technology yet another headache.
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