RIMES DATA
Andrew Barnett, global head of product strategy at RIMES DATA, says that although technology will play a huge part in future data management solutions, it is not always the silver bullet
How important is data to a financial institution’s success?
Data is integral to an institution’s success. All too often, data is imprisoned by technology, policy, contracts and people and firms aren’t getting true value from it. Financial institutions need access to high quality data, which is delivered in a way that enables them to extract value and generate insights. As a former chief data officer, I know first hand how important good data management is, and how it needs to unlock both defensive and offensive data strategies. Data management needs to come with the flexibility and transparency required to enable financial institutions to make the very best commercial decisions on how data is used across an organisation.
Has the pandemic amplified the advantages of utilising correct data?
The need to utilise correct data existed long before the pandemic. However, the true advantage to an asset manager is ‘correctly utilising’ the data to react and respond. Having confidence in your data helps enable all parts of the organisation to make informed decisions, from investments to business continuity. That confidence is gained from data that has a visible lineage, governance and ease of access, not trapped in legacy technology and accessible via IT teams. We have seen over 2020, when faced with terrible headwinds, organisations that have adapted their operating and commercial model successfully have access to a very visible supply chain of data, and thus information to make those important decisions.
What problems can inefficient investment management operating models cause?
Ultimately, any inefficient investment management model will have a direct impact on pension holders, profitability, innovation and employee morale. Over two decades ago investment managers recognised that back office functions and shared services could be outsourced to specialists. Because of this, the service models around back office functions are mature and, most often, aligned to the business model of the investment management firm. This has not been the case on the topic of enterprise data management, which has continued to apply sticky plaster to sticky plaster and created a legacy technology anchor around the success of the organisation’s data strategy, and thus wider organisational success.
Recognising that data management is the foundation to the success of any organisation, but not an investment manager’s core activity, is important. The solution is to buy an elastic service, not the technology. Asset managers will start to see a data management operating model that is a reversal of the current landscape where ‘how the data is managed determines how it can be used’ to one of ‘how the data is used is how it is managed’.
Are you seeing trends in anti-competitive behaviour on display from data providers? What other trends are you seeing in the data space?
The recent European competition authority reviews ‘calling for input’ from the Financial Conduct Authority (FCA) and the European Securities and Markets Authority (ESMA) market share calculations, suggests there is a growing interest in making sure that there is a fair playing field.
As a former chief data officer I was used to my chief financial officer and CEO asking why, with all of the investment in technology and centralising data management, are the costs of data still growing so fast? Wasn’t their reduction part of the data strategy business case? There are a number of reasons why this can be:
- Pension consultants have a pre-determined preference for a provider over others
- Data provider right of audit and annual reviews: these give great insight as to how an investment runs their business and uses their data. This can lead to ‘adapted’ data provider commercial models that recognise all the intellectual property they feel they have left on the table
- Legacy technology and processes lead to a lack of flexibility or high costs of change so moving to the new providers is a multi-year proposition which will not win a business case over other strategic or mandatory change programmes. The solution to this is to buy an elastic data management service with experience across all sources
- New data sets are growing at astounding rates and initial ‘free’ services are converting to basis point charges. Organisations cannot exclude these new services for risk of being seen as not innovative
Buying a service and not the technology, especially one which allows organisations to move from processing data to creating business benefit, will be a key trend going forward.
Is there a lack of innovation when it comes to utilising data? What challenges do people face when implementing data management projects?
There are pockets of data innovation in every organisation. Those that are within, such as innovation labs, which often have a very self-contained and narrow focus, with their beta product often unable to adapt for commercial or operational success.
The other innovation is the heroic activities taken by people in data management functions, laden with legacy technology and manual processes. These individuals have to ensure investments, distribution, operations and second-line functions have what they need and when whilst overseeing a severely underfunded function ran like a project.
The challenges start with calling data management a project. The real challenge is that you never have the ability to design a service from first principles, as there are multiple previous attempts at building the service with questionable successes. This leads to data being imprisoned by outdated legacy technology, antiquated policies and contracts, as well as being misunderstood by the people that use it. There’s a growing frustration that poor data management is a tax on an organisation’s business-as-usual and change objectives.
To avoid pitfalls, data strategists must discuss commitment to the activity and demonstrate regular business benefits. With the right strategy, they can look to building data capabilities for reuse right across the organisation.
Looking to the future, what kinds of new data platforms will we see and what role will technology play?
Future data management solutions will provide a comprehensive service across the entire investment management value chain, tailored to fulfil the specific needs of an organisation. The very best will become true value drivers, arming diverse business users with the information and insights they need to succeed. Technology will play a huge part in this, but it isn’t always the silver bullet; organisations must change their mindset around data management if they truly are to succeed.
