Data silos a productivity killer for investment institutions

By Clayton Issitt, State Street

For asset owners and asset managers alike, data silos are a silent productivity killer.  The antidote is democratising data. By democratising access to data, institutional investors empower their employees and stakeholders to make timelier and more confident investment decisions, transform their operating models and deliver a superior client experience.

However, many organisations suffer from decades of accumulated “technology debt” thanks to the proliferation of disparate solutions and the siloed data stores that were created to support those systems.  Once data silos take hold at an enterprise level, smaller silos start to proliferate because teams combine information from larger silos across the organisation in order to support their own workflows and areas of responsibility.

Against that backdrop, harnessing powerful technologies like AI, launching innovative new products and expanding into new asset classes is difficult if not impossible.

Data silos and the attendant lack of a holistic data management strategy are surprisingly commonplace. In our latest survey of 500+ institutional investors, three quarters of respondents rated their current data capabilities across the board at a nascent or intermediate stage of development. And most singled out data accuracy, access, analytics, governance and data integration as key areas for development.

 This has ramifications for customer retention and revenue growth. The forward looking firms that claimed to have a data management strategy in place say they experienced a 24 percent increase in customer satisfaction, a 21 percent increase in customer retention and a 19 percent increase in revenue growth on average.

Investment professionals have problems they need to solve, and they build or acquire specific technology solutions to address these needs. The solutions may address particular problems sufficiently, but often they are not interoperable with other technology applications.  As firms acquire other businesses or expand into new geographies, asset classes or strategies, this tends to proliferate.  The result is a complex landscape of systems that have difficulty communicating with one other.

A ray of light has been provided by the emergence of the Cloud, which is enabling meaningful interoperability between disparate applications and data stores for clients. Instead of engaging in time consuming data movement to feed applications, we can now bring the applications to the data by leveraging cloud native solutions like Snowflake.

That reduces a lot of the extracting, transforming and loading (ETL) overheads and time-consuming manual reconciliations so clients can start transitioning from high volume, low value IT operations to higher value activities.

From an asset owner perspective, it’s increasingly important to deliver a whole-of-fund view across public and private markets for both internally and externally managed assets. That involves capturing and curating structured and unstructured data from multiple sources and providers. Alongside the challenges of capturing information in a timely fashion from external asset managers, firms need to combine that with the decisions being made internally to ensure they are not working against themselves in the market or doing something today that may conflict with an investment decision taken by an external manager.

Bringing all of that financial information together with investment data is something the asset owner community has struggled with for a very long time and can now be delivered.  And enriching investment data with financial data accelerates the ability to bring applications to the data.

In the end, you can have a data set encompassing front, middle and back-office data together in a single model that all of your users can understand.  It's data that everyone can trust because they're looking at the same data at any given point in time.

It's not just about getting information into a single place; it's about sharing it with the rest of that ecosystem so that everybody in the organisation is working off a consistent set of trusted information.

So, democratising data; that’s something everyone can vote for.

Clayton Issitt is Head of Alpha Client Solutions, Asia Pacific at State Street.