The asset management industry has long embraced technology, and technological innovation – in particular innovation in data management – continues apace. Where this digital journey is taking the industry was one of the key topics of debate at this week’s BNY Mellon Consultants Conference, held in London.
Few can doubt the value to be had from the insights which come from aggregated, clean, real-time and usable data. Such data can provide opportunities for operational insights and have the potential to enhance the ability of asset managers and institutional investors to pursue new investment ideas and alpha generation. The challenge for investors is having access to systems with the capability to combine diverse sources of data while maintaining usability and efficiency.
A lot is possible technically of course, not least because of innovations in artificial intelligence, which are accelerating the trend by enabling the cleansing of unstructured data. But few asset managers, institutional investors – and indeed the asset servicers which support them – have the advantage of starting with a clean sheet of paper. Legacy technology and systems have slowed the ability of investment managers to get more value out of the data that they – and their asset servicing providers – hold.
At the same time, investors have widely varied capabilities and requirements, so asset servicers have to be able to cater for this with an array of formats and multiple methods of communication. While many asset managers and institutional investors are embracing dashboards and APIs, others are at earlier stages of their digital journey.
Modularization is likely to be key. Big bang conversions, closed networks and extensive customization may prove to be expensive dead-ends. Embracing open platforms and standardization for commodity activities provides benefits directly through simpler operating models, lower error rates and reduced costs. It also creates a solid, sustainable base upon which new, valued-added services and utilities can more readily be developed.
In practice, extending modularization and standardization will come with a greater willingness to outsource processes to providers who have the scale and focus to stay on top of new, technological innovations.
