Data-enabled agility will determine investment manager success
Globalisation … the rise of passive investing … fee models under pressure … client demands for greater personalisation and digital service capabilities … increased regulatory requirements … the hybridisation of traditional and alternative investment management … incursions by new market disruptors …
The asset management industry is evolving at an unprecedented rate. And all these changes are forcing asset and wealth managers to become faster, smarter, more focused, more resilient, more efficient, more responsive and more flexible.
It’s a tall order. Many firms won’t have the capacity to survive in this shifting world order. Those that do will need the willingness and business agility to continue to adapt.
Effective data management fosters business agility
Data, as the bedrock of all investment management activities, is a key facilitator in enhancing firms’ agility. Having ready access to customer and market information will help investment managers stay attuned to clients’ evolving demands, shift into new markets to take advantage of emerging opportunities, and adjust their business model as required.
As I’ve noted in previous blogs, having that all-important access to accurate, timely and usable information starts with comprehensive data capture. This includes automated custodian, counterparty and market data vendor feeds, along with complete client profiles (preferably held in a single, enterprise-wide CRM system) and, increasingly, flows of big data.
Capturing data is only part of the challenge though. The real value—and the secret to enhanced business agility—lies in controlling and managing the data so you can extract those nuggets of gold that will give your firm the ability to compete.
Benefits of an integrated data infrastructure
The most effective way I know is by having an integrated technology infrastructure working from a centralised, enterprise-wide data store.
There are multiple ways to achieve this end-state. One we see attracting interest is the use of data aggregation layers.
Aggregation creates a unified, business-oriented view for the data consumers, rather than a restricted system-oriented view of the limited data held within each specific application. This allows you, for instance, to see your risk across multiple business lines or asset classes, or to have a complete picture of a client’s holdings.
Aggregation layers also allow you to run intelligent analytics across this broader data scope, helping you better understand clients’ demands and investment objectives, and the P&Ls of different customers and business lines. Armed with this information, you can better model your business going forwards, and make client service and sales and marketing more effective.
Data-driven agility in all its forms
So how can this kind of set up enhance investment managers’ business agility? Depending on your firm’s focus, benefits can include:
- Front-office performance
Access to accurate and timely intraday data will help front-office staff identify investment opportunities, and make more reasoned and appropriate trading decisions, enabling them to enhance performance and manage risks effectively.
- Client service personalisation
Customised portfolio construction, and investment solutions that match clients’ evolving risk profiles and financial goals become possible with enhanced data management. For example, analysing the data stored in CRM systems will allow wealth managers to segment clients based on their characteristics and preferences, from which you can develop more targeted—and properly priced—products and services.
- Digital readiness
Data centricity is also critical to keeping pace with the digital revolution, by enabling firms to increase automation, improve data quality, and provide the sorts of responsive, fingertip services clients increasingly expect.
- Business expansion
Easy access to new data sources, with an open architecture for rapid system integration, makes it easier to expand into different asset classes and geographic markets, and service a broader universe of clients.
- Regulatory adaptability
A single, controlled data source providing enhanced data accuracy, transparency and access will help firms meet their regulatory obligations. And because such an infrastructure is more extendible, firms can respond to future demands without having to start a fresh compliance project for every new regulatory initiative.
- Business model flexibility
An accurate view and understanding of your data gives you the necessary control and understanding to either outsource or insource different business functions. Since your firm is not beholden to an external party for your data views, you can keep providers honest, and change them where appropriate.
And with the added scalability afforded by an automated data infrastructure, you will be equipped to handle any growth in transaction or portfolio volumes, and to tackle future industry developments without straining your internal resources.
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