A client perspective on industry trends and challenges

As a part of ACSA’s mission to develop efficient and innovative practices in custody and investment administration, ACSA invited Eleanor Debelle, Head of Business Operations & Management at IAG Asset Management to present at the recent ACSA Sydney member event and share a client perspective and insights.

Insurance Australia Group Limited (IAG) is the parent company behind many leading insurance brands in Australia, New Zealand and Asia. IAG underwrites more than $11bn of premium each year, and employs more than 15,000 people. Within IAG, the Asset Management division is the in-house investment business that looks after approximately $15.2bn investment assets, which cover technical reserves and shareholders’ funds.

Ms Debelle said while lower interests rates were necessary in the current macroeconomic environment, it meant there was a greater need for risk management and stress testing.

“Globally we have monetary policy that is at or near zero, we’re seeing balance sheet repair and asset prices rising, however this isn’t flowing into the real economy as fast as policy makers would like. As long as we have a system flush with cash , rising asset prices and very, very low rates, I think we’re vulnerable to a correction. So for any asset owner it’s important to measure and manage their risk.

According to Debelle, funds are focused on quality and secure data and reducing complexity in their business models, as well as a better partnership model with service providers.

“Organisations are looking to reduce complexity in how data flows in, through and out of their businesses. It’s fundamental to secure and source clean data, and the second piece of the puzzle for organisations is to partner with organisations who can source and produce real solutions, rather than service providers who tick boxes.

Eleanor also outlined three ways custodians could help their clients: capital efficiency; clearing and collateral; data organisation, management & reporting.

1. Capital efficiency – by providing more efficient and accurate look-through to underlying assets, custodians can help their clients make ‘smarter’ capital and risk management decisions
2. Clearing and collateral – custodians play a role in not just the safekeeping and management of assets, but also through reporting and unwinding the complexity that OTC regulatory reform creates
3. Data organisation, management & reporting – leveraging technology to manufacture solutions for your clients, shifting away from purely providing administration and compliance services

Addressing the crowd, Debelle summed up her talk by emphasizing the service and technology role custodians could play for their clients.

“The changing nature of the industry means the custodians who invest in the technology to provide a flexible solution, and also take time to understand the client’s business will be the ones that come out on top,” Debelle concluded.