Emma-Jayne Wood, Data Management Sales Specialist, SimCorp.

Investment firms often don’t have enough information around what their data needs to be doing for them – and what they need to do with it to use it effectively says Emma-Jayne Wood, Data Management Sales Specialist, at investment software provider SimCorp.

In the post-pandemic world, many fund operators report that their clients ask for more data

In Clear Path Analysis’s recently released Fund Technology, Data & Operations, Europe 2022 report, industry leaders from companies including Nikko Asset Management and Storebrand Asset Management look at the best ways fund operators can manage their data to be a profitable part of the business and not a burden.

In the post-pandemic world, many fund operators report that their clients ask for more data - which they give complicated reasons for needing.

“When our customers come to us they are looking for higher alpha, so they need to move into new asset classes,” says Wood.

"Many buyside firms are unable to scale effectively due to limitations in onboarding new datasets."

“They’re particularly looking for alternatives - this means an increase in the volumes of data; it means they need to procure more data and they need to onboard this data. Often this is a big challenge for them,” she explains. “ESG is a big theme as it means an increase in the volumes of the data that they are required to onboard, so they come to us.”

Wood also says that many buyside firms are unable to scale effectively due to limitations in onboarding new datasets and this has become a recurrent problem. The amount of data now received by financial institutions is huge – a Bank of England report revealed supervisory teams now receive the equivalent of twice the entire works of Shakespeare of reading each week.

Cloud-based storage and other new data techniques have also added to this confusion. They have also made risks around data more pervasive. According to an Accenture report on the cloud, between January and April of 2020, cybercrime saw an increase of 630% partly due to people working from home without correct data protection in place for accessing the cloud and other systems.

"There are still concerns about data risk on the cloud, but it is a bit of an outdated argument today."

“The cloud is now a relatively inexpensive way of centralising and storing their data,” says Wood. She adds that this change in technology and its use is an enabler. Clients are coming to them for more of it too, as it enables them to have centralised scrubbed data with a logged history, which means that they can respond to their regulator more efficiently.

“I know that there are still concerns about data risk on the cloud, but it is a bit of an outdated argument today given that the regulations and the standards do exist,” she says.

"Clients say they must launch projects but don’t know how to onboard the data."

Operational strategies to reduce risk around data management, however, are still a necessity in a world that uses the cloud extensively. “When we work with our clients, and they are looking to outsource some of these services, we do an assessment with them to try and spot areas for improvements,” Wood says, saying there are rigorous protocols around it. “Everyone assumes data management is easy, but in fact there is a massive skills shortage in the market and many of our clients are struggling to find the right people. They are having to go to the middle-office, take those personnel and get them onto data management tasks. This is one of the drivers for outsourcing. We sit clients down and look at what they are trying to achieve and the skillsets they have and then propose improvements.”

Wood says the advisory component of SimCorp’s managed data service is very successful and particularly for subjects like ESG, where their clients say they must launch projects but don’t know how to onboard the data. “Having the right skillset is key and having experts in each domain is probably one of the most important and underestimated factors in this whole data management journey,” she adds.

To learn more about this issue as well as others facing fund operators, read our report Fund Technology, Data & Operations, Europe 2022 here.

 

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