Speakers at the RIMES II Data Governance Conference agreed that data governance must be used to promote value and that buy-side firms (asset management etc) should take a broader view of their challenges rather than focusing on one specific area. During the opening discussion, Gartner outlined what they see as areas of contention and what firms should be focusing on. Gartner indentified three main challenges for buy-side organisations: big data, regulatory compliance and the effective use of data and data management. Firms often address these challenges separately, however, Gartner believes that if they take a more holistic view then they could tackle these challenges more effectively.
In a time when the users of data are expanding, the velocity of the market and business needs is increasing and the complexity of data and data relationships is growing, Gartner believes that firms should be looking into their best practices in data management and focusing on governance. The discussion concluded that data governance which sets out the requirements around data and data management, the function which carries out the requirements, should not be confused and it’s time for firms to think beyond the walls of their organisation and treat data as an asset rather than a liability or risk.
One of the key themes at the conference was data outsourcing. IT departments can no longer control data and many investment management firms are turning to third party service providers to outsource their IT services. According to a survey of IT managers in investment management firms carried out by Investit, third party suppliers will play a more prominent role in the future provision of IT services and 60% of participants already have or are planning alternative sourcing methods. Firms gave their reasons for outsourcing as, alongside lowering costs, outsourcing allows access to skill sets and innovation that they cannot afford.
According to Steve Cheng (Global Head of Data Management Solutions, RIMES) data management is a fundamental part of investment management and because of a number of different factors firms are finding data management much harder. “Data management is behind everything that investment managers do, from the investment decisions that they make, to all of the operations that go with this. They have to calculate risk, report to clients and report to regulators. The data comes from lots of different sources and is used in many different ways and up until recently buy-side firms have been able to cope, however, now there are a number of factors that make data management harder.”
Cheng said that firms are finding it harder to handle data management because of the pressure from regulators and competition within the sector. “Regulators are looking everywhere in financial services for evidence of good processes and systems, which extends to data management. Asset Management is a competitive sector and there are always new asset classes, investment strategies and new businesses. Firms try to keep up with this by increasing growth through new investment products and expanding to new markets. There is a lot of complexity within this area and all of this has made the job of an asset manager much harder.”
During a panel discussion about the impact of regulations on data management, the panellists concluded that they need more clarity from regulators on what they want and are spending time and money on regulatory compliance that they find hard to manage. So how can firms comply with regulation that is often unclear? Cheng believes that if firms build good data governance now, then they will be able to respond more quickly and more cost-effectively to regulatory demands and will be ready when regulators approach them with more compliance.
According to Cheng, one of the main themes that came out of the conference is that asset managers are not as big as banks, however in some ways they have just as much work to do around data and in order to stay competitive they are going to have start concentrating on their core business practices and then using service providers for the rest of their requirements.
By Nicole Miskelly, bobsguide Lead Journalist