Big data could be advantageous to investment managers if they innovate now, according to a white paper from BNY Mellon.
By bringing dark pools of data together with predictive analysis and behavioural finance, the investment industry could find ways to enhance product design, drive sales and improve prospective outcomes for investors.
The paper identified the characteristics of big data: “Volume, variety, veracity, velocity,” and suggested that the pools of data available for analysis are still growing. It pointed out a need for smarter data analysis, and said firms should also consider ‘social data’.
According to the paper, in an environment of shrinking margins and more powerful data analysis tools, the investment management industry has the opportunity to innovate, widening the scope of data-based solutions.
The process will involve experimentation and case studies, but could eventually prove beneficial for both investors and investment managers.
Daron Pearce, head of the global investment manager segment for investment services at BNY Mellon, said: "As the lines between the front, middle and back office continue to blur, smarter data management is essential for effective fund management. Big data facilitates that – but also poses challenges.”
“Through an understanding of these opportunities and potential obstacles, the investment management industry can use their own data to design, manufacture and market solutions more effectively with a view to generating outcomes that are more aligned to investor expectations."
Mark Gibbons, chief information officer for Europe the Middle East and Asia at BNY Mellon, added: "While client, transactional and portfolio data is collected across the investment management industry for historical, regulatory and analytical purposes, most managers are yet to fully leverage these diverse data pools with a view to identifying key correlations and generating fresh insights.”
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