Magazine Issues » September 2019

Sponsored feature: Efficiency in the age of data transparency

Maxime AertsTaking a holistic approach to data management and a wider view of data spaces in fund distribution will reconcile the needs of transparency and efficiency. By Maxime Aerts, Chief Operating Officer at Fundsquare.

Information transparency and operational efficiency are two of the most pressing issues in the investment fund and asset management industry today.

The calls for greater transparency and access to information continue, from regulators, investors and industry associations to far-sighted fund companies who see that more accessible data will mean increased opportunities for the industry as a whole. All agree that investors, distributors and advisers need robust, quality data that can be easily compared to help them in making the right decisions.

However, for some, greater efficiency and more transparency are incompatible goals. Distributors, investors, regulators and, ultimately, all actors in the distribution chain need to able to share increasing amounts of data and information. At the same time, existing business models are not particularly adopted to rapid and massive flows between fund actors, leading to concerns that overall efficiency and competitiveness will be impacted.

A case in point is the UK’s Cost Transparency Initiative. This provides templates and guidance for disclosing costs and charges of pension schemes to institutional investors and is more detailed than the European MiFID template. It is voluntary, but in August a government report recommended making it mandatory. Revealingly, the report states that no part of the industry “scores above half marks on transparency”. The fund and asset management industry therefore sees the rise of new challenges and needs solutions that will allow for on-demand data exchange and sharing in a manner that promotes transparency, creates value and enables efficiencies.

Holistic data management and new service levels
Success in tomorrow’s digital fund distribution ecosystem means superior technical and operational service levels and shall involve: ensuring data standardisation as much as possible, having real-time and on-demand access to data, being able to deliver and maintain quality data and ensuring that the right data and information gets to the right data consumer. Ideally, data consumers, or the digital points of sale, should be connected to data producers, or the digital service providers. This can be done in such a way that will create value at product structuring level as a result of data analysis and insights.

Holistic data management is the answer here. This is an iterative process connecting both types of actors. It has a structured delivery element, covering data accessibility and compliancy, and an enriched feedback one. However, to fully achieve its goals, what is also needed is the right technical and operational infrastructure.

One significant issue often raised is that of data ownership, security and trust. In this new environment, how can we both protect data and share data? In this regard, data exchange infrastructures and specialised data spaces are already successfully operating in other industries and such models need to be more fully embraced by the fund and asset management industry.

Throughout the investment fund distribution chain, efficiency and transparency are not opposites but are inextricably linked. Taking a holistic view on data and information flows will create opportunities for ongoing innovation in product and service delivery.

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