SEC Modernization has pushed the fast-forward button on the data management strategy for organizations of all sizes.
The regulator's new fund data transparency requirements, especially for Form N-PORT, include increased volume and frequency of portfolio reporting. Organizations then must look at more than just the volume of data they hold on behalf of their clients. While there is great value to that data, it is critical that firms take seriously the need to implement strategies to harness its power.
This entails not only identifying the appropriate sources from which that data will come, but also the very tools and strategy they will use for data collection, all while synthesizing it into meaningful information and then implementing. This must be done while simultaneously preparing for the monthly reporting required as part of Form N-PORT.
It begs the question: How do organizations prepare and integrate a global data strategy while at the same time answer regulation that is coming fast and furious? Operational challenges and strategic initiatives are certainly at a crossroads.
THE CHIEF DATA OFFICER
In many firms we are seeing the creation of the chief data officer role. In cases where the role has already been filled, there has been a shift in how they are intertwined in the company ecosystem.
Deloitte spoke about CDOs as part of its 2016 paper titled: "The evolving role of the chief data officer in financial services: From marshal and steward to business strategist."
Among the critical objectives of the CDO that the paper discusses are:
* Enhancing operational efficiency and reducing associated costs
* Enhancing risk management
* Improving regulatory compliance
Improving regulatory compliance is a key focus area as organizations, most notably in the third party administrator sector, need to continue to support and provide the flexibility to meet the needs of new and changing regulations. This position allows firms to best use that large volume of data across the enterprise and to reuse it across required regulations.
IDENTIFY DATA SOURCES AND GAPS
Identifying their data sources and gaps in data is critical. From that identification, they must put together a strategy to collect available data, but also to account for the gaps — whether that is a lack of data or limited capabilities to consume that data.
For example, many firms continue to rely on third-party data providers, or are in some cases just now turning to source data like liquidity and risk — with new SEC data reporting rules bringing this to the forefront. Unstructured data, in many cases, fall outside of the initial scope for an enterprise data management solution.
Many of these solutions are designed, built and integrated to consolidate the numerous internal systems and data sources into one central location. That consolidation can allow for one enterprise level of source data for use across the spectrum of services within a third party administrator or within the various departments of an asset manager.
Many third-party administrators utilize a portal to increase common user experience for their clients. The CDO or head of technology must consider how to incorporate the data management strategy, not only for purposes of access from the portal, but also to integrate the overall regulatory and compliance process within the organization.
Considerations, such as level of client interaction, level of internal departmental interaction depending on regulation, revision process procedures or interaction with existing or new third-party technology in use must all be evaluated when implementing a strategy.
INTERNAL OR THIRD-PARTY SOLUTIONS
The aforementioned concepts need to be considered in conjunction for regulations that are requiring compliance within compressed time frames.
In many instances, IT divisions within these organizations may feel it is in their best interest to incorporate the scope of meeting the regulatory requirements within an existing data management strategy and project. This can lead to over-extending resources or increasing scope exponentially. It also increases the potential for IT to take on regulatory demands and compliance beyond their realm of expertise.
Solution evaluations should include taking advantage of third-party technology offerings and key personnel in the overall enterprise data management program. Third parties can provide regulatory- or compliance-specific software to meet the needs of a regulation which can be incorporated into a third party portal or an internal asset manager ecosystem. They also allow clients to leverage the proactive monitoring and regulatory/compliance expertise that a technology partner can provide — thus lessening the burden on internal staff.
TIME IS NOT ON YOUR SIDE
There are numerous other factors that will go into the research, design, build and integration of an enterprise data management strategy. However, without the right leader and direction at the top, appropriate vetting and inclusion of applicable scope, and leveraging existing or new technology partners, many are left with more questions. With the need for transparency increasing and the timeframes to provide that information decreasing, financial services firms don't have the luxury of time.