TSAM: Retaining provider choice is imperative, because data quality can be so volatile, says panellist
21 June 2022 London
Image: Lumos sp
The considerations made when adopting technology, particularly cloud services, really matter, for instance because best practice in methodologies for ESG data remains so volatile, said Anders Kirkeby, vice president, head of open innovation at SimCorp at this years’ TSAM Conference in London.
Kirkeby made the comment in the first technology session of the day — moderated by Robert Madej, founder and CEO of PureFacts Financial Solutions — in which panellists debated whether new technology always equals new alpha.
Kirkeby highlighted that all technologies should have application programming interfaces (APIs), however, Stephen Collie, head of sales engineering at FINBOURNE Technology challenged Kirkeby’s comment by outlining that it is important to understand API’s are not a complete strategy in themselves and connectivity is only a starting point.
Collie later elaborated further for Asset Servicing Times. He said: “We see firms focusing on API strategies, which is a good start, but without the right control environment, entitlements protocol and domain knowledge alongside APIs, unlocking the potential of your data and accessing it across your teams and functions, will be difficult."
Collie went on to say that it is important to identify systems from the ground up, with an API as a primary element, but told delegates it was important to “be opinionated about your data and have a system that understands data items. Question whether your API delivers value.”
The discussion began with comments on how the COVID-19 pandemic had necessitated the need for more streamlined cloud services.
Glenn Murphy, chief operating officer, at Multrees Investor Services, outlined: “The use of cloud services increased because of the necessities of the COVID-19 pandemic. As an industry we were challenged to migrate and move to a working-from-home model as quickly as possible — cloud-based services changed from being just a platform into an essential data-as-a-service.”
Gabriel Callsen, director, market practice and regulatory policy, at the International Capital Market Association, said: “The industry now understands different solutions better through the necessities caused by the pandemic — and where particular solutions fit in an infrastructure. Many firms now question, among other things, a solution’s geographical coverage, its SWIFT connectivity, and whether it's a host-managed service.”
Madej went on to ask panellists what they thought the next phase of cloud services would look like. FINBOURNE’s Collie responded: “The next phase will be software-as-a-service, it is not a luxury for asset managers to adopt this, it is a necessity.
“But there needs to be more trust in vendor partners — many say they are moving to the cloud, but are making the move in a lift and shift approach, which is a very different proposition to a SaaS-native provider.”
Discussing whether a “lift and shift” option was possible and sustainable when moving a company’s current technology on to a single cloud service, SimCorp’s Kirkeby affirmed: “There is a post-pandemic appetite for bite-sized implementations — clients prefer bite-sized implementations of technology, or bitesized change when migrating to cloud.”
Collie added: “What clients want is bitesized implementations at the level of change they want and at a comfortable risk-appetite. Generally, they do not want to invest a lot of capital in one go, and over a significant period of time.”
When asked what he thought was the biggest transformational mistake made in operational technologies in recent years, Murphy answered: “Early-on investment across an unreasonable time period.”
He added: “Where is the strength of value over two to three years, where no one sees return on investment in those technologies? As previously mentioned, breaking it down and working on component by component with bite-sized implementations, really does make the process more successful.”
Concluding the panel, and going back to the original question, Murphy confirmed: “Data plumbing matters, but data must flow back to fund the manager or portfolio managers so they have the tools and the analytics to put that data to work — that’s where true alpha is generated.
“We can see ESG as an example of this — the quality of data surrounding ESG compliance and understanding is getting there, data that is presented to the fund manager is slowly getting easier to decipher, but what type of plumbing does it need in the future, to generate the best alpha?”
Kirkeby made the comment in the first technology session of the day — moderated by Robert Madej, founder and CEO of PureFacts Financial Solutions — in which panellists debated whether new technology always equals new alpha.
Kirkeby highlighted that all technologies should have application programming interfaces (APIs), however, Stephen Collie, head of sales engineering at FINBOURNE Technology challenged Kirkeby’s comment by outlining that it is important to understand API’s are not a complete strategy in themselves and connectivity is only a starting point.
Collie later elaborated further for Asset Servicing Times. He said: “We see firms focusing on API strategies, which is a good start, but without the right control environment, entitlements protocol and domain knowledge alongside APIs, unlocking the potential of your data and accessing it across your teams and functions, will be difficult."
Collie went on to say that it is important to identify systems from the ground up, with an API as a primary element, but told delegates it was important to “be opinionated about your data and have a system that understands data items. Question whether your API delivers value.”
The discussion began with comments on how the COVID-19 pandemic had necessitated the need for more streamlined cloud services.
Glenn Murphy, chief operating officer, at Multrees Investor Services, outlined: “The use of cloud services increased because of the necessities of the COVID-19 pandemic. As an industry we were challenged to migrate and move to a working-from-home model as quickly as possible — cloud-based services changed from being just a platform into an essential data-as-a-service.”
Gabriel Callsen, director, market practice and regulatory policy, at the International Capital Market Association, said: “The industry now understands different solutions better through the necessities caused by the pandemic — and where particular solutions fit in an infrastructure. Many firms now question, among other things, a solution’s geographical coverage, its SWIFT connectivity, and whether it's a host-managed service.”
Madej went on to ask panellists what they thought the next phase of cloud services would look like. FINBOURNE’s Collie responded: “The next phase will be software-as-a-service, it is not a luxury for asset managers to adopt this, it is a necessity.
“But there needs to be more trust in vendor partners — many say they are moving to the cloud, but are making the move in a lift and shift approach, which is a very different proposition to a SaaS-native provider.”
Discussing whether a “lift and shift” option was possible and sustainable when moving a company’s current technology on to a single cloud service, SimCorp’s Kirkeby affirmed: “There is a post-pandemic appetite for bite-sized implementations — clients prefer bite-sized implementations of technology, or bitesized change when migrating to cloud.”
Collie added: “What clients want is bitesized implementations at the level of change they want and at a comfortable risk-appetite. Generally, they do not want to invest a lot of capital in one go, and over a significant period of time.”
When asked what he thought was the biggest transformational mistake made in operational technologies in recent years, Murphy answered: “Early-on investment across an unreasonable time period.”
He added: “Where is the strength of value over two to three years, where no one sees return on investment in those technologies? As previously mentioned, breaking it down and working on component by component with bite-sized implementations, really does make the process more successful.”
Concluding the panel, and going back to the original question, Murphy confirmed: “Data plumbing matters, but data must flow back to fund the manager or portfolio managers so they have the tools and the analytics to put that data to work — that’s where true alpha is generated.
“We can see ESG as an example of this — the quality of data surrounding ESG compliance and understanding is getting there, data that is presented to the fund manager is slowly getting easier to decipher, but what type of plumbing does it need in the future, to generate the best alpha?”
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