ETF Solutions
Ronald C. Landry
Dec 2024
Even before the uptake in AI, data has always been a key component of the fund services industry. Ronald C. Landry, vice president, head of Asset Manager and ETF Solutions at CIBC Mellon, looks at the challenges in extracting meaningful insights from this wealth of information
Image: ETF Solutions
Data is the fuel that drives the fund services industry. Data quality, governance, and accuracy remain critical yet challenging areas. As banks and insurers increasingly recognise data as a core asset, the ability to access, manage, consume, distribute and act on data efficiently is essential. Fund managers, administrators, and service providers recognise the competitive edge that hinges on the quality and timeliness of actionable data — a resource that is both a challenge to harness, and a transformative opportunity.
Challenges in data management
For fund services professionals, the task of managing data effectively — collecting, storing, and cleansing it — is filled with obstacles. According to research from CIBC Mellon, a significant portion of industry respondents identifies obtaining real-time, high-quality data as the primary barrier. Technological limitations, unstructured data sources, and issues with data reliability and completeness further complicate efforts to maintain an efficient data ecosystem.
In moments of market disruption or regulatory demand, firms rely heavily on data from both internal teams and external advisors. Around two-thirds of respondents admit to relying on specialist external suppliers in times of crisis, as internal data systems may not have the immediacy or accessibility needed for critical decisions. Given limited resources, external advisors provide not just raw data but also interpretative insights, enabling organisations to navigate turbulent environments more effectively.
Extracting meaningful insights: The data dilemma
The journey from data collection to actionable insight is fraught with challenges. The inability to work with unstructured data types or the lack of analytical tools is cited as a major hurdle by respondents, hindering the extraction of valuable insights. Additionally, the absence of a single, centralised ‘source of truth’, obstructs data integration efforts, leading to fragmented data landscapes and dependency on multiple sources.
For example, ESG data poses specific challenges due to its disparate measurements and standards, nonfinancial factors, and complex nature. Reliable data platforms that consistently manage this type of information are in demand, yet scarce, adding another layer of complexity for firms that are under increasing pressure to meet ESG reporting requirements.
Advances in reporting: Essential tools and techniques
To meet the demand for timely and accurate reporting, the industry is gravitating towards advanced data analysis and quality tools, with an emphasis on up-to-date systems that can handle large volumes of data. Tools that support data integrity, as well as those that simplify the integration of new data sources, are highly valued among industry players.
Interestingly, while artificial intelligence (AI) holds promise for the future of data analysis in fund services, current AI tools have yet to mature to the point of being trusted for critical reporting tasks. However, this gap highlights a significant opportunity for tech providers to develop AI solutions tailored to the industry’s unique requirements and which meet the necessary governance and compliance standards.
Technological innovation and future trends
Over the next three years, technological innovation and interest rate fluctuations are expected to be the most impactful trends shaping the fund services industry. Respondents prioritise technological advancements, particularly in data management, analytics, reporting, and AI tools. Such technologies not only improve operational efficiency but also enhance decision-making capabilities, making organisations more attractive to clients seeking reliable, data-driven insights. Interest rate volatility remains a close second in terms of future influence, reflecting ongoing uncertainty in financial markets. The recent period of rate hikes continues to drive industry restructuring and resilience planning as firms brace for potential shifts in economic conditions.
Outsourcing segregated funds: Opportunities and barriers
For Canadian insurers, segregated funds represent a key area for potential outsourcing. While only a small percentage of respondents view these funds as too customised for third-party servicing, several barriers persist. Chief among these are cost concerns and regulatory hurdles. Adapting existing in-house processes to fit third-party solutions and managing the complexity of technological requirements also rank highly as perceived challenges.
Outsourcing these services can offer efficiency gains, yet organisations must carefully weigh these benefits against the demands of cost, compliance, and process alignment. As the industry evolves, finding cost-effective and compliant ways to manage segregated fund services remains a top priority.
← Previous interview
CACEIS
Benjamin Ayache
Next interview →
fundcraft
Julien De Mayer
