Northern Trust: Asset managers in pickle over data
06 April 2016 Chicago
Image: Shutterstock
Many asset managers are not gaining as much value from the data they're handling as they could, and there are still significant challenges to be tackled in data management, according to a survey by Northern Trust and the Economist Intelligence Unit.
The survey of asset managers and insurance professionals found that while, generally, firms are finding tools and technologies useful in finding value in data, there is variance in the level of value they are gleaning from it.
Only 13 percent of respondents said they are able to capture the entire value of their use of data. However, 44 percent said they capture this value ‘fairly well’ and 41 percent answered ‘somewhat well’.
Although the level of value gleaned was varied, only 2 percent of respondents said they do not capture value well at all.
The white paper put this partially down to asset managers still experimenting with how to best capture value from data, pointing out that a lot of the data received is irrelevant to their current models of practice, and that it takes significant resources to clean and prepare the data received.
The survey results also revealed remaining challenges in making good use of data. Although results were fairly varied, the need for processing and cleaning data emerged as the top difficulty, named by 36 percent of respondents. This was followed by the issue of data presented in non-compatible formats and the inability to determine what is and is not useful, cited by 29 percent and 28 percent, respectively.
In addition, 20 percent noted a challenge emerging from incorrect data and 21 percent said data requires user interfaces that can be difficult to understand.
According to the report, issues around reconciliation and data compatibility can leave asset managers with “strong reservations about the reliability and the utility of their data”. This could become a serious problem as the volume, speed and variety of data increases.
When asked their top three reasons for investing in new data sources, responding to regulatory requirements emerged, unsurprisingly, as the top response, cited by 51 percent of respondents.
The second most popular reason was to improve customer satisfaction, highlighted by 43 percent, followed by the ability to meet new business goals, named as a reason by 33 percent.
These reasons for investment, however, are not necessarily in line with firms’ top goals for developing data strategy. The top goal here was to improve investment decisions, cited by 54 percent, followed by managing risks and ‘modelling or otherwise assessing’ risk, which were named as goals by 43 and 34 percent, respectively.
According to Northern Trust, in order to be useful, data must be aggregated, or captured from various sources; normalised, or translated and formatted in order to reach consistency; verified through reconciliations and valuation; and integrated for seamless delivery to business processes and external systems, making the aggregated data a ‘golden source’. The paper noted, however, that it can be difficult to find a data management system that can do all of these things.
Pete Cherecwich, head of corporate and institutional services for the Americas at Northern Trust, said: “This survey confirmed for us what we recognize as some of our clients’ biggest challenges.”
He added: “Whether they are looking for ways to manage their investment decisions, monitor their risks, or improve their reporting, they need to extract more value from their data to gain actionable insights.”
Serge Boccassini, global product solutions manager at Northern Trust, commented: “Developing a comprehensive and flexible data management strategy is essential for asset managers to succeed in a competitive marketplace.”
The survey was conducted in Q3 2015, and included 201 asset managers and insurance executives from the US and Europe.
The survey of asset managers and insurance professionals found that while, generally, firms are finding tools and technologies useful in finding value in data, there is variance in the level of value they are gleaning from it.
Only 13 percent of respondents said they are able to capture the entire value of their use of data. However, 44 percent said they capture this value ‘fairly well’ and 41 percent answered ‘somewhat well’.
Although the level of value gleaned was varied, only 2 percent of respondents said they do not capture value well at all.
The white paper put this partially down to asset managers still experimenting with how to best capture value from data, pointing out that a lot of the data received is irrelevant to their current models of practice, and that it takes significant resources to clean and prepare the data received.
The survey results also revealed remaining challenges in making good use of data. Although results were fairly varied, the need for processing and cleaning data emerged as the top difficulty, named by 36 percent of respondents. This was followed by the issue of data presented in non-compatible formats and the inability to determine what is and is not useful, cited by 29 percent and 28 percent, respectively.
In addition, 20 percent noted a challenge emerging from incorrect data and 21 percent said data requires user interfaces that can be difficult to understand.
According to the report, issues around reconciliation and data compatibility can leave asset managers with “strong reservations about the reliability and the utility of their data”. This could become a serious problem as the volume, speed and variety of data increases.
When asked their top three reasons for investing in new data sources, responding to regulatory requirements emerged, unsurprisingly, as the top response, cited by 51 percent of respondents.
The second most popular reason was to improve customer satisfaction, highlighted by 43 percent, followed by the ability to meet new business goals, named as a reason by 33 percent.
These reasons for investment, however, are not necessarily in line with firms’ top goals for developing data strategy. The top goal here was to improve investment decisions, cited by 54 percent, followed by managing risks and ‘modelling or otherwise assessing’ risk, which were named as goals by 43 and 34 percent, respectively.
According to Northern Trust, in order to be useful, data must be aggregated, or captured from various sources; normalised, or translated and formatted in order to reach consistency; verified through reconciliations and valuation; and integrated for seamless delivery to business processes and external systems, making the aggregated data a ‘golden source’. The paper noted, however, that it can be difficult to find a data management system that can do all of these things.
Pete Cherecwich, head of corporate and institutional services for the Americas at Northern Trust, said: “This survey confirmed for us what we recognize as some of our clients’ biggest challenges.”
He added: “Whether they are looking for ways to manage their investment decisions, monitor their risks, or improve their reporting, they need to extract more value from their data to gain actionable insights.”
Serge Boccassini, global product solutions manager at Northern Trust, commented: “Developing a comprehensive and flexible data management strategy is essential for asset managers to succeed in a competitive marketplace.”
The survey was conducted in Q3 2015, and included 201 asset managers and insurance executives from the US and Europe.
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