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APAC Funds Processing Automation and Standardisation Report Summary (2018)

Core Content

This report provides an overview of the progress in automation and standardisation of fund orders in the Asia Pacific region, focusing on Hong Kong, Taiwan, and Singapore. It highlights the increasing adoption of automated systems and the role of international standards, particularly ISO20022, in shaping the industry's future. The data is collected from transfer agents (TAs) across these key financial hubs and is used to assess the state of operational efficiency and standardisation in the funds processing space.

Main Objective

The primary goal of the report is to track the industry's progress towards automation and standardisation of fund orders in the APAC region. It aims to provide insights to market players, asset managers, regulators, and other stakeholders to guide future developments and improvements in the funds processing industry.

Key Information

Survey Coverage

• Total surveyed TAs: 25 (11 in Hong Kong, 9 in Taiwan, 5 in Singapore)
• Total orders processed in 2018: 6.6 million
• Manual orders in 2018: 1.96 million
• Manual rate in Q4 2018: 24.5% (down from 30.6% in Q4 2017)

Automation and Standardisation Rates

• Total automation rate in Q4 2018: 75.5% (up from 69.4% in Q4 2017)
• ISO automation rate in Q4 2018: 33.2% (up from 31.9% in Q4 2017)
• Proprietary FTP rate in Q4 2018: 42.3% (up from 37.6% in Q4 2017)

Regional Breakdown

Hong Kong

• Total automation rate in Q4 2018: 63.8% (up from 61.7% in Q4 2017)
• Total orders processed in 2018: 2.8 million
• ISO automation rate in Q4 2018: 27.3% (up from 22.2% in Q4 2017)
• Proprietary FTP rate in Q4 2018: 36.5% (down from 39.5% in Q4 2017)
• Manual rate in Q4 2018: 36.2% (down from 38.3% in Q4 2017)

Taiwan

• Total automation rate in Q4 2018: 84.1% (up from 81.7% in Q4 2017)
• Total orders processed in 2018: 2.9 million
• ISO automation rate in Q4 2018: 42.6% (down from 44.2% in Q4 2017)
• Proprietary FTP rate in Q4 2018: 41.5% (up from 37.5% in Q4 2017)
• Manual rate in Q4 2018: 15.9% (down from 18.3% in Q4 2017)

Singapore

• Total automation rate in Q4 2018: 83.8% (up from 56.2% in Q4 2017)
• Total orders processed in 2018: 0.94 million
• ISO automation rate in Q4 2018: 22.1% (down from 30.8% in Q4 2017)
• Proprietary FTP rate in Q4 2018: 61.7% (up from 25.4% in Q4 2017)
• Manual rate in Q4 2018: 16.2% (down from 43.8% in Q4 2017)

Main Views and Trends

• Overall Automation Trend: There was a steady increase in automation rates across all three regions, with the total automation rate reaching 75.5% in Q4 2018, up from 69.4% in Q4 2017.
• ISO Adoption: While the ISO automation rate increased slightly, the adoption of proprietary FTP systems grew significantly, indicating a shift in preference for localised solutions.
• Manual Processing Decline: Manual processing rates decreased across all regions, showing a positive trend towards automation.
• Regional Variations:
  • Hong Kong: Automation rate of 63.8%, with a moderate increase in ISO automation.
  • Taiwan: Highest automation rate at 84.1%, showing strong progress.
  • Singapore: Rapid growth in automation, reaching 83.8%, driven by a surge in proprietary FTP usage.

Challenges and Opportunities

• Fragmentation: The APAC region's diverse regulatory environments and market maturity levels pose challenges to standardisation and automation.
• Interoperability: Improved infrastructure interoperability and access to markets are critical for future growth.
• Standardisation: Greater alignment with international standards, especially ISO20022, is necessary for efficient cross-border operations.
• Collaboration: Continued collaboration among regulators, industry players, and consortia like AFAC and ALFI is essential for advancing automation and standardisation.

Next Steps

• The next APAC Funds Processing Automation and Standardisation (APFAS) report is planned for Q4 2019, covering progress from July 2017 to June 2019.
• The report is published bi-annually by SWIFT in partnership with AFAC, ALFI, HKIFA, and other stakeholders.

Key Stakeholders

• SWIFT: Provides the platform and standards for secure financial messaging.
• AFAC: Asia Funds Automation Consortium, promoting automation across APAC.
• ALFI: Association of the Luxembourg Fund Industry, supporting international standards.
• HKIFA: Hong Kong Investment Funds Association, representing fund managers in the region.

Conclusion

The APAC region is witnessing a positive shift towards automation and standardisation in fund processing. While the overall automation rate has improved, the balance between ISO compliance and proprietary systems remains a key area for further development. Continued collaboration and standardisation efforts are vital to overcoming regional fragmentation and enhancing operational efficiency.