Back-office data is increasingly moving beyond its core purposes and being used to support commercial front-office functions such as investment strategy and distribution by a substantial proportion of institutions, State Street has concluded from a piece of far-reaching research.
In a survey of 920 asset managers, asset owners, wealth managers, and insurers across North America, Europe, the UK, APAC, the Middle East, and Latin America, State Street found that nearly one-third (32%) of respondents are prioritising the use of back-office data to generate competitor intelligence and market insights.
Firms highly satisfied with their custodians are significantly more likely to leverage this data for front-office priorities (74% vs 65%).
Another data point showed that institutions are significantly more likely to have or be implementing a holistic data strategy across their front-, middle- and back-office-data operations than individually within those areas.
“The role of the custodian is evolving rapidly,” said Chris Rowland, head of custody, digital and fund services product for State Street. “As this research shows, clients are increasingly looking to their service providers not just for operational support, but for strategic insight. State Street and others who can harness back-office data to inform front-office decisions will be the partners of choice in the next phase of institutional innovation.”
A difference between the back- and front-office with regards to data was seen in their use of GenAI however.
The research discovered that respondents were seeing less value in using GenAI for current back-office activities while expectations were also low for the future.
“Given that GenAl’s focus is on accelerating data use and analysis, and back-office activities are primarily data-related, we expected to see more excitement around GenAl for the back-office,” State Street said in its paper. “Surprisingly, this was not the case.”
Across back-office activities, only 20 to 30 percent reported that GenAl was currently adding value in specific activities. Compared to the front-office, there appeared to be few areas where GenAl stood out as already adding value.
One-third of respondents in EMEA and APAC foresee GenAl improving internal operations and vendor relationships, and one-third in the Americas identify benefits from delivering data and reporting to consumers.