Bad Data Costs Billions; Can a New Model Save Asset Servicing?

LONDON – March 03, 2026 – A startling new report has quantified a problem that plagues the back offices of global financial institutions, revealing that a staggering 67% of errors in the asset servicing industry are directly caused by inaccurate data. The findings, published in the final paper of a four-part series by data solutions provider Smartstream and research firm The ValueExchange, argue that the industry has reached a critical inflection point where incremental fixes are no longer viable.

The paper, titled ‘The Case for Transformation’, concludes that financial firms must pursue a complete overhaul of their operating models, placing data quality and the ISO 20022 messaging standard at the core of a new, holistic strategy.

An Industry at a Breaking Point

The asset servicing sector, responsible for the complex post-trade lifecycle of securities, is straining under unprecedented structural pressures. Transaction volumes are surging at an annual rate of more than 25%, while market-wide shifts like the move to T+1 settlement in North America are dramatically shrinking processing timelines. Compounding these challenges is a landscape of intensifying regulatory expectations, culminating in the mandatory transition to the ISO 20022 messaging standard by November 2026.

Industry observers note that many firms are attempting to manage this new reality with operating models rooted in outdated frameworks. These legacy systems were never designed for the scale, transparency, or intraday control now demanded by the market. The result is a reliance on manual, exception-driven workflows that are both costly and fraught with operational risk. The report suggests that continuing down this path is unsustainable, as rising volumes will only magnify the existing cracks in the system.

The Root Cause: A Pervasive Data Quality Crisis

While the 67% statistic from the Smartstream paper is alarming, it reflects a widely acknowledged crisis across the financial sector. Other industry studies and expert analyses consistently identify poor data quality as a primary driver of inefficiency, misguided decisions, and regulatory failures. The problem is particularly acute in corporate actions processing, one of the most complex and risk-prone areas of asset servicing.

Corporate actions announcements often originate from disparate sources in a variety of unstructured formats, including PDFs and web pages. This fragmentation forces operations teams to engage in a highly manual process of sourcing, interpreting, and re-keying information, a workflow where errors can easily be introduced. Industry data suggests automation rates in this area remain below 40%, with many participants still manually revalidating data from supposedly reliable sources. This reliance on manual intervention creates significant operational costs, delays, and avoidable risks, such as missed entitlements and costly post-event claims.

“The central question facing organisations is no longer whether change is required, but how to justify and execute change at scale, and in particular in the case of corporate actions processing,” commented Adam Cottingham, Product Manager at Smartstream. “ISO 20022 provides the common language, but true transformation requires firms to rethink workflows, accountability, data ownership, and client transparency end-to-end.”

ISO 20022: Compliance Burden or Strategic Catalyst?

With the November 2026 deadline looming for markets like the United States, financial institutions are facing a non-negotiable mandate to adopt ISO 20022. The standard replaces legacy messaging formats with a richer, highly structured, and more granular XML-based language. However, the report from Smartstream and The ValueExchange warns against viewing this transition as a mere compliance exercise.

Firms that treat the migration as a simple technical mapping project risk compounding existing fragmentation and missing a generational opportunity for strategic improvement. The true value, experts argue, lies in using the standard as a catalyst for genuine process redesign. By embedding structured data and interoperability deep within their operations, firms can unlock significant benefits.

Martin Lawrence, Chief Customer Officer at The ValueExchange, elaborated on this point. “Our findings show that the real value of ISO 20022 emerges when it is paired with genuine process redesign. By replacing fragmented, narrative-heavy workflows with structured, interoperable data, firms gain clarity, control and resilience at a time when volumes and regulatory expectations continue to rise.”

This strategic approach allows firms to move beyond simply meeting regulatory requirements and toward building a more mature, status-driven operating model. The richer data embedded in ISO 20022 messages enables enhanced automation, real-time visibility into transactions, improved analytics, and more effective risk management. Those who embrace this vision can reduce operational risk, lower long-term costs, and ultimately deliver a superior client experience.

Redefining the Operating Model for a New Era

The ultimate conclusion of the research is a call to action for the industry to move beyond upgrading individual systems and instead redefine the operating model itself. A holistic model built on a foundation of structured, interoperable data is presented as the only viable path forward to manage escalating complexity and turn regulatory mandates into a competitive advantage.

This strategic shift aligns with broader investment trends in the financial sector. By 2030, firms expect to dedicate approximately 63% of their budgets to innovation and resilience, a significant pivot away from merely maintaining legacy technology. The adoption of ISO 20022 can serve as the architectural blueprint for this transformation in asset servicing, providing a common language and data structure to build future-proof, automated, and resilient workflows.

As the industry navigates a period defined by exponential volume growth, compressed timelines, and demands for greater transparency, the opportunity is clear. The challenge is not simply to adopt a new messaging standard, but to fundamentally rethink how the work of asset servicing gets done, transforming a regulatory obligation into a powerful operational advantage.