The great majority of Asian fund distributors still receive dividend reports from their European counterparts by fax or email, leaving the sector lagging behind the equity markets where automated dividend payments have long been the rule.
The lack of automation, according to a Calastone survey conducted late last fall of 25 fund distributors located in Singapore, Hong Kong and Taiwan, forces distributors to invest time and money into re-keying and manually integrating into their systems dividend files from different formats – fax, email, paper, and partially automated straight-through processing (STP) systems.
These time-consuming tasks cause delays in the processing chain ranging from an hour to over half a day, resulting in investors receiving their dividend reports late and, most likely, their dividends.
Delays are also an issue for accumulation fund investors as late dividend payments will affect the number of new units credited to an investor’s holding if the market moves up in the interim.
As well, when manually re-keying data, mistakes can creep in resulting in incorrect payments, which can damage the firm’s reputation. Such mistakes should not only concern local fund managers, but also the European fund managers whose products they sell.
Unfortunately, there is little sign that Europe’s fund providers, or their transfer agents, are investing the necessary time and money into speeding up the process by adopting a dividend system with a wholly automated, straight-through processing feed.
This presents a big challenge to distributors who are in near-universal agreement that automation is needed to reduce delays and mistakes, and aid the onward use of dividend information in areas such as investor reporting.
With fund distributors across the world facing increasing resource constraints, and prompt service being key to satisfying customer needs, it’s time for Asian distributors to start pushing their European partners to adopt – as is the case in the equity markets – a fully automated dividend reporting and payment process.