New areas of data management becoming increasingly apparent, says study
19 August 2013
By Asia Asset Management
The investment management industry is currently grappling with a drive for transparency that is being driven by regulators, by clients, and by internal buy-side perceptions of how a successful business should operate optimally, according to a recent study from DST Global Solutions. Being demonstrably clear and open about investment processes and decision-making has become ever-more critical post financial crisis as investors and regulators seek far greater visibility of how firms are managing assets.
DST believes that this drive for transparency is resulting in a reappraisal of data management disciplines. It asserts that firms need to organise and control their own data in order to be able to provide a comprehensive picture to both internal and external stakeholders.
DST’s experience shows that "data management" has historically been synonymous with "reference data management," and it was the firm’s sense that reference data management as a market has been increasingly well served over the past five years. “We have noted an emerging trend over the past 18 months, however – organisations are looking to better manage transaction data, position data, analytics data, performance measurement data, valuations data, and a whole plethora of operational data that we increasingly see being referred to as "investment data", the company stated.
With this in mind, DST commissioned Aite Group to produce what it believes is the first truly global buy-side study focused on investment data management, with equal participation from European, North American and Asia-Pacific-based firms. The results are both expected and unexpected.
The report, Right Time, Right Content: Business Drivers for Smarter Investment Data Management, written by Virginie O’Shea from Aite Group, reveals that achieving effective investment data management is a high priority for asset and wealth management firms across the globe. The need is driven by a confluence of factors forced by business need, risk management, and regulatory reporting requirements.
According to the study, while the drivers pushing asset managers and wealth managers to consider new support structures for investment data management are different, data aggregation is a common challenge. The report says that 90% of those surveyed indicated that they had experienced an increase in the need for data aggregation capabilities and that they felt they were ill equipped to support these requirements.
The findings clearly highlight the fact that addressing the challenges is becoming a critical issue that firms need to prioritise in order to continue to operate successfully.
Some of the key findings include:
The majority of firms (76%) have seen a significant increase in the priority of investment data management across their firms over the last two years. As noted by one firm, the focus is on moving away from data reconciliation and cleansing and toward using data for competitive advantage by enabling the "slicing and dicing" of investment or operational data and better data aggregation support.
There is a disparity between wealth and asset manager drivers for spending on and prioritising investment data management. Regulation is the primary driver for 78% of wealth managers, but only 42% of asset managers cite this as one of their investment drivers. Internal business requirements and client focus are a far greater influence for asset managers, with 75% citing these as primary drivers for investment.
The top two challenges for wealth managers in managing investment data are aggregating data (67% of wealth managers) and ensuring data consistency (67%). Asset managers also struggle with aggregation (58% of asset managers) but are more concerned than wealth managers about data latency (42%), likely as a result of a recent focus by firms on keeping a more accurate and timely investment book of record.
Slightly more than half of firms are planning to invest in vendor technology to improve their management of investment data in the next 12 months. A minority (19%) plans to build new functionality on top of existing in-house platforms.
“Data is the DNA of investment management firms, yet finding ways to better harness the value of this data has been an under-served challenge in the industry,” said Ms. O'Shea. “We reveal the serious challenges facing these firms in attempting to conduct business as usual with investment data that is disparately stored and inconsistently managed. These challenges can, in fact, act as a barrier to entry into new markets due to a lack of scalability.”
More News >