Deciding on an effective data management strategy has become a focal point for buy-side operations teams, both for regulatory and investment decision purposes, according to panellists at the InvestOps Europe conference.
As buy-side firms continue to drive down the path of digitalisation, many are taking the next step in achieving ‘digital alpha’. This means adopting a strategy where there is a convergence between operations and the technology innovation teams, enabling constant reviews of systems and platforms in order to streamline the data that underpins investment decisions.
“Technology also provides an empowerment opportunity, allow people to get closer to the technology, and work more agile with the innovation departments in order to become experts in a particular system,” said Alain Mandy, chief operating officer, global funds, Wellington Management.
However, to have a successful data management strategy within investment operations, it requires plugging all the gaps where data could be misinterpreted or not utilised as effectively. As investment products become more complex, data is becoming increasingly valuable to support these investments.
This is particularly important for risk management data, which at times, could be lost on the portfolio managers and their investment decisions.
“Risk management data is becoming essential, but there is still a gap in communicating that information to the portfolio managers. You need to make sure the risk management information is put together in way that can be translated by the front-office and give value to their investment portfolios,” added Ersilia Molnar, chief operating officer, Muzinich & Co.
Operations teams, however, are still challenged with conveying the importance of a data management strategy to the rest of the firm. Robin Middleton, head of investment operations at Royal London Asset Management, highlighted this battle in explaining the value of data to the key decision makers.
“The challenge is to build a business case around the data that can influence decision makers throughout the organisation. It is a hearts and minds battle, and requires either a chief data officer or chief technology architect to hammer home the importance of data when investment decisions are being made,” said Middleton.
Buy-side firms are also looking to enhance governance procedures for data management, with a focus on best practices, roles and responsibilities, and accountability for the quality and accuracy of the data. This is influencing both how they interact with data, and how they oversee data provided to them by third-party outsource providers.
“To aid accurate decision making, you have to take a step back and look at the data architecture on an ongoing basis, especially when consolidating multiple sources of data into one,” explained Stephen Johns, head of data GX, EMEA, State Street Global Exchange.
“There is a cultural behaviour change involved in data management. If this is absent, you revert back to bad practices and impacts good decision making.”