The PostTrade 360 Helsinki conference, on Wednesday and Thursday, will feature Sampo’s head of back office Sirpa Yrjönmäki on stage in a panel on illiquid alternative assets. Increasing automation saves hours, and lets humans play a more supervisory role – but these assets stay a challenge.
“All in all, our trade volumes are quite low, so there is always a balance of how much effort should be put into automating different areas,” says Sirpa Yrjönmäki, the head of back office operations within the investment operations of Finnish finance giant Sampo Group.
“But so far we have tried to automate as much as possible, so that the work of the back office personnel becomes more of a controlling function.”
Keeps it inhouse
Sampo comprises major insurance activities across the Nordics – Mandatum, If and Topdanmark. At the end of 2018, the group’s investment portfolio was worth €22 billion. Sirpa Yrjönmäki’s group back-office team of six employees is part of a 17-person investment operations department that handles about €10 billion of this, while the sub-businesses also have their own operations departments.
Sirpa Yrjönmäki’s back office operation has the strategy of performing all back-office activities in-house, rather than outsourcing. Obviously, the challenge of automation grows with the diversity of the asset classes.
About 15 percent of the total allocation of her group is made up by equity and alternative funds and syndicated loans.
“About 30 percent of the manpower goes into handling that 15 percent,” she says.
Portals work so-so
As for the illiquid alternative assets which will be the topic of her panel performance in Helsinki on Wednesday 30 October, Sirpa Yrjönmäki sees the biggest challenge in their manual nature – meaning that virtually all transaction information (call, distributions etc) is received in pdf files, by e-mail or via a portal, with no automation or standardization.
“The portals are even harder than the email messages, since the security measures can be quite extensive and it is sometimes difficult to find the right documents within the portals.”
“Another difficulty is to determine the nature of cashflows, especially for distributions of assets, so that we will handle them correctly both for the reporting and accounting purposes.”
When discussing technology, however, one should not miss the importance of trimming the basic processes too.
“We tackle the challenge by having good processes to monitor all incoming e-mails, and also by having good internal guidelines for all funds on how to handle the cashflows. At the moment there is no automation for the process, but we have some plans to make information readable from pdfs in order to enter the data somewhat automatically into the treasury system,” says Sirpa Yrjönmäki.
Other asset classes are easier
So far the discussion on the challenging asset classes of equity and alternative funds and syndicated loans.
“Other asset classes have a very good straight-through process”, Sirpa Yrjönmäki adds.
She notes that these sum up to the main part of the total allocation, with money market instruments making up 13 percent, fixed income (including bonds, FRN and IR funds) totalling 45 percent, and equities (including equity funds and ETFs) counting for 27 percent.
“At the moment we utilize our existing systems for automating any new processes. We have an Excel-based supplementary system in addition to our treasury system, that can handle data input into our core system. The next step is to find the solution for trying to automate the manual input from pdfs.”
PostTrade 360 Helsinki will take place on 30–31 October, at Pörssitalo. Agenda, speaker list and tickets can be found here, and our editorial coverage will be gathered here. Sirpa Yrjönmäki will be taking part in a Wednesday morning panel hosted by SEB’s head of portfolio solutions Ulrika Possung, also featuring Ainun Ayub, alternatives products head of Europe and Asia at Brown Brothers Harriman, and Fredrik Söderlund, head of alternative investment services at SEB.