Increased buy side demand for streamlined data access, including full aggregation of all operational resources, continues to be front of mind for the asset servicing segment. In addition to receiving actionable insights, clients are looking to boost their data literacy, with the ultimate goal of enhancing overall performance.
In an industry that has long recognized the significant value within value-add service offerings, data is now widely seen as the most pivotal piece of the pie. As the need for faster, more sophisticated investment information reaches a fever pitch, providers are quickly shifting their resources to become more data-focused.
Accordingly, data-as-a-service, or DAAS, has in effect become the new software-as-a-service, facilitating the delivery of data-on-demand, across the globe and, using open-sourced technology, available cross-platform. Having a single informational source allows portfolio managers to make more informed investment decisions, accurately calculate NAVs and sharpen other essential processes.
Data deluge
How big is big data at present? In its report “At the Tipping Point” on the potential for cross-asset disruption, advisory firm EY noted that some 90% of today’s global data was created within the last two years alone. As such, managers must have the means to efficiently harvest the infinite flow of information in order to identify opportunities in the making and, in turn, develop successful investment strategies. As more firms utilize machine learning and AI as part of the decision-making process, full automation of the investment lifecycle continues to gain traction, giving managers with the proper complement of data-sourcing tools a significant advantage, according to the report.
The word seems to be getting out. According to a new survey from WBR Insights in collaboration with SimCorp, some eight-in-10 managers ranked better access/accuracy of data tops in terms of tackling strategic priorities; “Empowering Multi-Asset Front-to-Back Investment Operations” also revealed strong support for consolidating systems and reducing system interfaces, reducing/eliminating manual activities as well as maintaining a single investment book of record (IBOR).
While typically the byproduct of outdated legacy systems, data silos continue to affect many on the buy side, and has been particularly prevalent among acquiring firms that fail to incorporate new data sets. Without proper guidance, integrating all of these disparate sources of information could pose an enormous challenge, even for companies with deep pockets.
Thus, consolidating resources through a multi-asset, IBOR-based platform is essential for those seeking a one-off, enhanced data portal. This “single source of truth” gives clients access to the most consistent and timely information available, adding stability to the investment portfolio, while also improving risk-management readiness. As investor preferences grow increasingly diverse, having an integrated platform can help streamline the onboarding of newer asset classes, as well as forays into emerging territories.
Additionally, data integration allows firms to address their regulatory readiness—no small feat given the formidable compliance/disclosure requirements under FATCA, IFRS and similar statutes. By addressing vulnerable business segments, companies have the wherewithal to build a more expansive and diverse global portfolio.
For their part, providers have responded with new solutions designed to satisfy customers’ growing data requirements. In the US, BNP Paribas is one of the few providers of integrated custody, fund administration and middle-office services through its Neolink client portal.
Integration opportunities
Despite ongoing interest in OTC derivatives and other emerging opportunities, asset managers may not yet be completely capable of handling the big-data requirements that such strategies require. Lack of front-to-back synchronization remains a major impediment; without proper integration in place, operational breakdowns and inaccurate data are more likely.
To optimize their data usage, managers must have the means to organize and analyze all internal and external information. Using a platform for integrating front, middle and back offices gives firms a 360-degree view of all mission-critical data, including both current and historical positions, at all times. Like the best traditional service offerings, DAAS has the capacity to significantly lower costs, boost revenues, as well as address risk and regulatory liabilities, creating a more stable and scalable business in the process.
While bringing the requisite systems in house is not out of the question, the time, resources and personnel needed to successfully manage a multi-sourced data platform can be considerable. Not surprisingly, accessing a purpose-built DAAS solutions set on an outsourced basis is widely seen as the most efficient and cost-effective route for asset managers.
As managers continue to seek strategies for consolidating disparate sources of information, aggregated DAAS is likely to remain a priority for asset servicers. This points to substantial opportunity for qualified specialist third parties over the longer term.
