As firms grapple with the difficulties of a distributed workforce and seek to reduce costs and physical footprints, Brown Brothers Harriman has seen an uptick in outsourcing decisions across foreign exchange, trade management, cash and securities reconciliations, and other investment operations functions.
As firms consider how to finance and execute these projects in a constrained environment, BBH continues to see:
- A greater focus on modular implementations, starting with one or two functions and adding more over time.
- An increase in large ($500bn+) managers outsourcing trade management, reconciliations, and messaging as they look to access more durable and scalable infrastructure, and free up internal resources.
- A significant number of new implementations and increased demand for automated FX solutions (both security related FX and currency hedging) as firms look to reduce the costs associated with an in-house desk and eliminate the risk of manual processes, while retaining control, transparency, and oversight of their FX process.
- A heightened focus from global regulators on delegation and outsourcing. The most recent example comes from the Central Bank of Ireland, whose Consultation Paper 86 (CP86) noted that a “significant number” of fund management companies are not fully adhering to governance expectations and do not have resources in place to ensure compliance. This is spurring more Irish fund complexes to consider outsourcing additional functions.