Ahead of Sibos, we asked a range of industry experts this question: Data volumes continue to explode. What do you think the fund management industry can do with so much data, and are systems up to the challenge of making sense of it?
Kevin Bonar (Citi Global Transaction Services)
Kerry White (BNY Mellon Asset Servicing)
Markus H Ruetimann (Schroder IM)
David Kane (JP Morgan WSS)
Phil Lynch (Asset Control)
Chris Yaldezian (IBM Software Group)
Christopher Miliffe (Allianz Global Investors Capital and Data Warehousing Institute)
Kevin Bonar (Citi Global Transaction Services), Kerry White (BNY Mellon Asset Servicing)
Markus H Ruetimann (Schroder IM), David Kane (JP Morgan WSS), Phil Lynch (Asset Control)
Kevin Bonar (Emea head of middle office & wealth management, Citi Global Transaction Services)
The explosion in the quantity of data requires either a large investment in technology, or an expert partner to overcome difficulties. Unlocking value starts with capturing and ensuring the quality of the information at source; having an information architecture that can ensure the quality of the data; and deliver in a flexible manner. Better information, delivered on an accurate and timely basis, enables better investment decisions.
Kerry White (global product management director, BNY Mellon Asset Servicing)
Recent market volatility coupled with shrinking settlement windows are influencing data volumes substantially. During the first week of August, US market data rates peaked at 5.3m messages per second for the first time, which was a 20% increase from prior records.
Fund managers are dually challenged by these volumes and new regulations like Solvency II that demand measurement and proof that factors for compliance are built into everyday business processes.
Markus H Ruetimann (group chief operating officer, Schroder Investment Management)
Data management feels like being in space without frontiers. The appetite for data is insatiable, accentuated by exploding regulatory requirements, complex client and product reporting needs as well as data that is captured, processed, analysed and disseminated for many different investment decisions and operational reasons.
With yottabytes of data flowing through countless systems, the threat of data corruption or loss is real and can lead to material unintended consequences. Between market participants, data standards – such as Swift – exist, but cover only part of the value chain. This is particularly true for the fund services world where data flows between fund managers, custodians, fund administrators, pricing agents and distributors.
While systems do all the number crunching, experienced professionals will be required to convert data into information and to use the information as the basis for various business and investment decisions. Efficient data management is a distinct competitive advantage.
Chris Yaldezian (banking industry smarter commerce lead, IBM Software Group)
The funds management industry has to manage enormous volumes of data, but true information comes from taking the data and analysing it based on the questions one wants answered. From our experience, current systems are widely being updated to face this challenge as many firms are acquiring the new analytic tools required to make smarter decisions.
These analytic tools are not just making it easier to find responses to the operational business questions they want answered, but combined with optimisation technologies can also help to improve customer service.
We are increasingly seeing fund management firms acquire these technologies to analyse their customer portfolios from multiple view points, and to be able to offer clients improved recommendations based on the their risk profile and other targeted criteria, thus increasing client satisfaction.
Christopher Miliffe (strategic data management manager, Allianz Global Investors Capital, and VP, San Diego Chapter of the Data Warehousing Institute)
The problem is less that data volumes have grown. Instead, requests for new data have introduced more complexity. To manage these requests, Allianz Global emphasises disciplined data governance. Documenting our data management policies minimises the risk of misusing data outside its intended context. Providing clear data definitions allows for transparency.
Consistent, coherent policies allow data to be used across multiple applications for different purposes, avoiding redundancy – silos – and potential conflicts. Our adoption of various classification standards – sector, country, asset class, etc – minimises the amount of custom coding required in reporting and analysis. Our data governance programme provides a framework for introducing new data into our environment, helps us perform impact analyses to downstream reports/applications and anticipates the future data needs of our business.
Phil Lynch (president and CEO, Asset Control)
The amount of data needed by financial institutions has exploded on every front. More venues, portfolios, customisation, indices and data-dependent asset classes have driven up volumes, and valuations are now needed daily or even intraday.
Both investors and regulators want more transparency and proof that adequate controls are in place – along with robust audit trails and accurate and timely reporting. In short, firms have to get more data, do more with it, more often, and in a shorter timeframe.
It is no longer something that can be avoided, ignored or delegated down the chain of command. A culture of data governance is needed to create robust processes around every aspect of data sourcing, selection and deployment. And just like corporate governance it needs to go all the way to the top of the organisation.
David Kane (global custody operations executive, managing director, JP Morgan Worldwide Securities Services)
The extensive data requirements of investment managers across the wide range of fund structures including mutual funds, pension funds, sovereign wealth funds and hedge funds has required a fundamental assessment of systems architecture and associated costs. The cost-effective and slick collection, scrubbing and updating of data into trading and risk management systems is critical to delivering consistently high standards of decision making and controls.
For fund managers, developing in-house infrastructure solutions or outsourcing components are key strategic decisions. Significant progress has been made by Swift and others in developing common formats and protocols to communicate the data flows but as transaction volumes continue to grow across a growing population of instrument types and asset classes, extensive infrastructure is required to support data management and storage. Some investment managers have elected to leverage custodians’ investments and capabilities in this field, enabling more focus on developing trading strategies and systems.
With the continuous evolution of expanding requirements and profitability challenges across the industry, we see the level of investment and focus required increasing and strategic choice in this area continuing to be critical.
©2011 funds europe