What does data management look like at your firm? Are you relying on piecemeal legacy systems? Do you solve data glitches using tactical patches or manual interventions? If so, you are not alone.
Conversation surrounding data and data management is taking center stage due to the premium placed on accurate and timely reporting, the importance of high quality trading decisions, and effective resource management. Firms are looking for data solutions, with the built-in capability to scale for future market demands, while enabling them to become more operationally efficient and compliant at minimal cost.
Considering data as both a strategic priority and a business enabler, I decided to sit down with Advent’s go-to expert and global business strategist on all things data, Michael Lobosco, Director, Advent Direct Data Services. With more than 13 years of experience helping firms solve their data challenges, he’s the perfect person to help me bring you a three-part series on data trends and needs within the asset management industry.
Kendall: What are some trends and initiatives you see emerging in the financial industry surrounding data and data management?
Michael: There is definitely a trend around firms wanting to leverage centralized services for both data collection and distribution. It’s becoming more and more evident that investment firms across the industry are engaging in the same labor intensive activities for data management and each are doing so at an increasingly high cost. And it’s clear the overall industry is beginning to frame data trends in this way—that is, speaking about the opportunities for new levels of collaboration, efficiency, and client service through shared services. CEB TowerGroup’s presentation on the Top 10 tech initiatives for asset managers this year solidified my thoughts on this as a major forward-looking trend in the industry.
Kendall: So how do you think these trends will manifest themselves?
Michael: As firms are recognizing the imperative to have a comprehensive data strategy as well as the costs and risks associated with their current processes, there is an opportunity to pull resources together. So I think it will come out in the formation of collective data utilities, which will help to manage costs and risks associated with data management. Firms will choose to adopt certain utilities based on the legitimacy, capabilities, and security of third party providers. As firms develop and strengthen their data strategies, I think it’s inevitable that some sort of vetting process will also emerge for choosing which utilities to leverage.
Kendall: Are there any other trends you see emerging?
Michael: There are definitely key trends surrounding data’s role in regulatory compliance. Data is the backbone of proper compliance and helps ensure that firms meet their requirements. With each new regulation comes new data challenges and costs which is another reason firms are looking to leverage centralized data services – why should a firm incur the costs and risk of custom or in-house solutions when everybody is trying to solve the same problem?
Another is changes to the trading and settlement lifecycle. I could see something emerge around these processes as both are continually evolving and can be costly and labor intensive to manage. In an effort to be more efficient and ultimately drive profitability, firms will look for platforms and systems that can scale and evolve based on market requirements.
Kendall: Why has data management risen to the top of financial institutions’ agendas? And why do you think FinTech companies have begun investing heavily in developing data management systems?
Michael: As I briefly mentioned, we are seeing a lot of firms’ having either costly and high risk custom solutions or no formal strategy whatsoever. I think this stems from firms either underestimating the effort involved in implementing cohesive data strategy or simply not knowing how to even begin developing a strategy, given all the complexities. That said, I think firms are now really starting to feel and recognize the challenges of both these scenarios given increasing investor demands, the intense regulatory environment, and the need for firms to differentiate themselves based on services. These factors are driving firm executives to sponsor a formal data strategy as a critical component to their firms overall business plans for long-term growth and sustainability.
Also, let’s not forget that compliance is a major driving force behind the increase in data investments. Complying with regulations requires firms to have access to a variety of reliable datasets. Inaccurate or incomplete data can lead to compliance failures and heavy fines.
It’s also worth mentioning that data automation eliminates manual work and human error. Firms can spend less time sifting through and searching for data, and spend more time putting it to use in delivering a high quality client experience and driving better trading opportunities.
Kendall: So do you think firms are beginning to see data as an opportunity, rather than an issue or problem to solve?
Michael: Exactly, all of the data problems can be seen as an opportunity to make better investment decisions, improve client satisfaction, and ultimately increase the profitability and long-term health of the company.
Kendall: My last question is around the benefits clients see from investing in a data management system – what’s the ROI?
Michael: There are so many clear benefits to having formal data strategy and leveraging centralized services. By automating data, clients will see cost efficiencies, scalability without increasing resources, and more time to focus on client-facing activities. Data automation helps firms stay compliant by cleansing datasets and providing error-free data for reporting and auditing purposes.
A great example of this is one of our clients whose firm was experiencing data lags due to unconsolidated, unorganized spreadsheets and lack of automation. The firm found inconsistencies in its data pulled from multiple sources, such as external data sets and other silo-ed systems. By using a centralized data service, which provided a single source for their data needs, including both market and portfolio data, they realized cost and time-saving benefits. This client also found implementation and maintenance of a single data source to be far simpler, allowing for faster and easier access to more accurate data. The firm has executed more informed trading decisions, and realized effective risk management, streamlined workflows, and stronger client relationships.
To learn more about the importance of data automation, the benefits of automated data services, and features to look for in a data management platform, check out Data Services: How to keep the lifeblood flowing.
Check back right here in two weeks for the second part of my discussion with Michael on data regulatory requirements.
Kendall has leveraged her passion for writing along with her background working with enterprise cloud technologies to strengthen Advent’s external communications.