The age of big data and the cloud

14 April 2014   Category: News, Asia, Global   By David Macfarlane

StatPro Group’s Chief Operating Officer, Andrew Peddar, shares with AAM his views on cloud computing for the financial industry.

Asia Asset Management: In which ways is cloud computing changing the dynamics of the finance industry?

Andrew Peddar: The first thing to say is that cloud computing is a technological revolution that’s been gaining momentum for the better part of the last four or five years, in all industries around the world. Companies that have embraced cloud technology are typically seeing increased efficiency, greater productivity, and enhanced transparency. More specifically, as it pertains to the clients of StatPro Revolution and StatPro in general, they are seeing that it can lead into them being able to offer a better service to their clients as they are able to offer more flexible, dynamic reporting, and they can increase their sales by better articulating their investment messages to their clients, and also offer better tools should they land those prospects to become clients. Particularly, in regard to regulation, transparency around data is huge for clients of ours now, whether it’s around specific regulations or just having a better understanding of their investment book themselves. And finally, reducing costs: the ability to centralise IT and external data sources has meant that clients can reduce their costs on that front, as well as reduce their spend on other software vendors as they look to consolidate in the cloud.

How do regulators view cloud computing generally, and more specifically in Asia?

Regulators around the world, particularly in the Asia-Pacific region, are spending a good amount of time with those they regulate, understanding what cloud computing is and how those firms want to implement cloud-based technology solutions in their own companies. At StatPro we support our clients through that process, making sure we give the right answers to the right questions for the regulators so that everybody understands what is meant by cloud computing and how it pertains to the financial industry.

As the focus on risk management increases, what has this meant for your clients, especially in regard to compliance?

I think the Lehman crisis and all the other crises that followed i.e. Madoff, Libor scandals – they’re global scandals perhaps affecting certain regions in different ways at different times. But fundamentally it’s created a lack of trust through a lack of transparency. Really what clients are looking for is better information as to what is going on with their investments at any point at any time, and really the exposure of that data to those clients’ requirements needs to be done in a transparent way so that the investment manager can explain what they’re doing.

Post crisis, from my own perspective as an investor, we all have much more information at our fingertips then we ever had before. Investment managers now not only have to be transparent in their investment book of record; they also have to be able to respond to questions from a much better-informed investment public, with access to a plethora of information at the touch of a button.

UCITS and AIFMD are European-type standards that people adhere to to sell their funds through the European Union, and it’s becoming more and more costly for managers to meet these regulations. Fundamentally, they need a piece of software that’s going to manage the data side of it and the reporting side of things. So, with StatPro Revolution we offer a per-fund tariff for such regulations – so if you have one UCITS fund or one AIFMD fund that you need to become compliant and sell throughout Europe then you can take StatPro Revolution at that cost without having to buy an entire system – which is what you would have to have done in a model that isn’t per portfolio.

How are your services positioned and what new trends are shaping the industry?

The industry in general is under significant pressure cost-wise and ultimately that’s because the overarching businesses are under margin pressure on their bottom line. The cost pressures in these offices are mainly driven through layers and layers of complexity, centred around technology that’s built up over the years as businesses have acquired other businesses, and bought new vendors that have new databases and operating systems. It’s actually a very complex environment to which these asset managers have all their technological solutions and really what the cloud is able to do is distill all of that into much simpler, bite-sized pieces. At StatPro, for example, we have centralised external market data sources, the IT platforms, and all the analytics platforms that clients can use into one platform in the cloud –this allows for easy use and dissemination of data, which reduces the costs dramatically for our clients.

Is there any danger of information overload?

In the modern day, we’re all overloaded with information and the financial industry is no different. It’s down to vendors such as ourselves to make sure that we’re producing the right information in the right shape to be given to the right people.

We build what we believe to be intent-driven software, and that means when a user interacts with the software, we are intelligently predicting what they may or may not want to do next. We present the screens in such a way and also make sure that the dissemination of data is prepared in a very structured way – because our product is cloud based, the access to the reports and the data is available 24/7 via an iPad, via any browser – so for the data that is presented to our clients, we want to make sure that it is very obvious as to why it’s being presented in such a way. We spend a lot of time giving our clients the tools to tailor that information to be given to those clients at any given point and at any time because ultimately every portfolio that’s loaded into an investment analytics platform has got a number of different stakeholders, and those stakeholders want different parts of information at different points in time – and our product allows for that dissemination.

What is your business strategy for the Asia-Pacific region and where do you think the best prospects for growth lie?

We’re a very ambitious company and are very excited about being in the Asia-Pacific region. We have offices in Hong Kong and Sydney to service clients in the region, and really what we’re seeing in Asia-Pacific is the same as were seeing elsewhere in the world – a need for simpler, more efficient investment analytics, pieces of software – and we target private wealth, hedge funds, mutual fund companies, and asset managers directly to sell our services. We also target the fund administration and distribution platforms of these clients and the reason for this is because, like our clients, they need to offer better services and retain their clients. As such, they are looking to add new, better services to their platforms, but also the fund administration and distribution companies have information that we don’t have on our platform. We have all the market data sources, we have all the analytics, and we have all the IT, what we don’t have is the account portfolio information, which the administrators and distributors do have. 

So, by plugging into those platforms, the end hedge fund or mutual fund company can have a pure turn-key solution with StatPro revolution – more than anything the clue is in the name of our product, Revolution. We believe we’ve got a very disruptive product; it’s the only true analytics system that’s based in the cloud but the disruptiveness also comes with the business model. Investment analytics in the past has been very expensive, and has only been able to be consumed by the larger asset managers out there. We charge on a per portfolio basis, which means if you have one mutual fund, one hedge fund and you want all the analytics we supply, you can have that for a monthly fee per portfolio, which is completely disruptive and is unique in the market. We are looking forward to exploring further opportunities for the platform in the Asia-Pacific region as well as globally.