“In data we trust,” the saying goes. And indeed, as the digitalisation of business has unfolded over the past decade the importance of trustworthy data has increased massively. But what happens if you can’t trust your data? Its an important question, and one investment managers are asking with increasing frequency.
Since the 1980s, new data management concepts have arisen with each technological jump, evolving each time to optimise the value of data. However, the journey has not been straightforward. Indeed, in many cases changes to data management practices have been harmful insofar as they have made it harder for firms to access a single trusted source.
Trust is crucial to risk management
For the investment industry, the challenge is not around just a few misaligned data points, it becomes a severe operational risk. For instance, regulators are currently cracking down on financial services industry firms, and handing out record fines for non-compliance. For investment managers unable to solve the data challenge, regulatory reporting becomes an operational minefield and increases the risk of reputational damage. And let’s not forget that regulators are upping their own game, using more sophisticated tools to monitor the markets. The FCA, for instance, has set out its data strategy in which it plans to make “better use of data to spot and stop harm faster, setting and testing higher standards and promoting competition and positive change.”
Why is data management so difficult for investment firms?
Driven by extraordinary market disruption and rapid digitisation, there has been an explosion in the volume, speed, and variety of data. There’s also been several major changes to the ways in which firms store, govern, and manage data – from the data warehouse to the data lake. This is a highly complex situation and one which makes it increasingly difficult for firms to do what they need to do: ensure that trustworthy data can be accessed and used by all business users and not just highly skilled data scientists. To get to this utopia, a well-considered data activation strategy is imperative.
Data powered business: Organisations that effectively unlock and expose their data outperform their peers
A study by Capgemini reveals that in a single year companies that had mastered data practices, technologies, and skills achieved 70% higher Revenue per Employee and 22% higher profitability that competitors. However, in the investment management sector COOs, CDOs, and CTOs often find the promise of data-driven business remains out of reach.
This is of concern given that data volumes are growing exponentially, with emerging data including ESG and Alternative Data lacking the governance and structure of more established sets. It’s little wonder that 66% of asset managers believe that data management needs to be completely disrupted.
Activate your data: remove the friction that stops the people who understand the data interacting with it
The secret to an effective use of data in an organisation is to reduce the barriers between data and the people who can generate actionable insight from it. A core element of this task is breaking down silos. Usually, data is linked to a specific use case and cannot easily be made available elsewhere. According to one study, the most common data management challenge asset managers cite is aggregating data across fragmented infrastructure to create a single, easily accessible data layer.
Then there’s the issue of data literacy. This isn’t unique to the investment management sector. According to Deloitte, just 21% of the global workforce is fully confident in their data literacy skills and only 25% of employees feel fully prepared to use data effectively. Data is meaningless if it cannot be understood and one of the best ways to solve that is via a combination of an industry-aware platform and a meta-data-driven data strategy, that is crucial for understanding, using, and managing vast amounts of data, especially in the age of big data and digital transformation.
Data can’t wait for IT: Access to data can’t be constrained by highly governed change framework
Far too often, IT has been the gatekeeper of data in investment firms, and for very good reasons such as security and quality control. These precautions are crucial, but they reduce the speed at which portfolio managers, analysts, risk officers and other data users can access the data. This is particularly so when IT mandates a highly governed change framework. In a digitally native world where agility is crucial, data users often have to endure laborious testing and validation processes.
User centric services: Modern technologies enable the personalisation of data services without the compromise a “house view” imposes
Fortunately, COOs, CTOs, and CDOs can address all the above challenges by becoming “data native.” The first step is to put users centre stage. That means establishing access patterns to ensure that users can find, understand, trust, and interact with data easily and comprehensively.
Combining data with context creates information, which in turn creates signals, insights, and value. Data therefore needs to be connected in a single actionable source of intelligence that places everything in context.
Next, data must be democratised. Democratisation means getting more eyes are on the data and feedback on that data should be frictionless and actionable. That means ensuring all users can interact with data regardless of their expertise levels.
Customisation is also important – putting in place mechanisms that, for example, ensure users and applications aren’t flooded with data before they’re ready and that data delivery is intelligent, and access controlled. In part, this requires establishing multiple access paths to data, such as through GUI, API, analytical tools, or generative AI.
Be kind to yourself: Roles that are responsible for data have the daily challenge of requiring you to flip between being a magician and mechanic
Data owners in investment firms have many competing demands – from reducing the cost of data access, finding new ways to commercialise data, creating organisational trust in the data, and reducing time to quality and market. Legacy technologies and their enforced operating models require data owners to be part magician, part mechanic, and are no longer sustainable.
HUB Data Connect delivers a modern streaming, industry-aware data platform that acts as the connective tissue across your data ecosystem. HUB activates the use of your data sets early and to a dispersed user base while at the same time underwrites your future investment in data technology. With HUB, firms can finally achieve that data management utopia: a single source of highly governed, trustworthy data that’s consumable by any business user when they need it. The result is a lower risk profile, increased agility, and ultimately a competitive edge.
