Cost Basis Reporting: Reducing Total Cost of Ownership

by Alexander Camargo,  Isabella Fonseca, December 24, 2013
Industry Trends
North America

Abstract

Spending on cost basis reporting is not limited to the cost of developing or purchasing software. Among brokers, operations and staffing costs account for almost three-quarters of total spending on cost basis reporting. As such, it is vital that firms find ways to control these costs.

In the report Cost Basis Reporting: Reducing Total Cost of Ownership, Celent explores long-term influences of total cost of ownership, predictors of high costs, and ways to maximize cost basis reporting investment.

Firms are still focusing on compliance for fixed income and options regulations, but they are also increasingly exploring ways to make their technology more efficient in the long term. Addressing operations processes such as data scrubbing, reconciliation, and integration of systems are of highest priority. These new considerations are a result of firms recognizing the increased spending in cost basis reporting.

“The biggest predictor of higher than average costs is the development of in-house technology,” says Alex Camargo, Analyst and author of the report. “There are, however, ways for all firms to reduce their TCO. Firms cannot go back in time and reduce their in-house investments. But they can look at their current operations, their data scrubbing efforts, and their downstream systems to make the process more efficient going forward.”

The report begins with an overview of firm priorities and market trends. It then describes key drivers of spending and analyzes what factors predict higher and lower spending and budgets. The report concludes with a forward-looking perspective on how firms can maximize their cost basis reporting investment.

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

Executive Summary

1

Introduction

2

 

Research Methodology

2

 

Revisiting Firm Satisfaction

2

Market Trends

4

 

Cost

5

 

Ongoing Pain Points and Challenges

5

Total Cost of Ownership

7

 

Spending and Budgets

7

 

Predicting Costs

9

Looking Ahead

11

 

Approaches to Constraining Costs

11

 

Beyond Compliance

12

Leveraging Celent’s Expertise

13

 

Support for Financial Institutions

13

 

Support for Vendors

13

Related Celent Research

14

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