37% of institutional investors say the accuracy of data is their highest strategic priority, according to a survey highlighting the data challenges facing the investment community.
The research, conducted by State Street and the Economist Intelligence Unit (EIU), surveyed more than 400 institutional investors globally and revealed an industry that is divided between “data leaders” and “data laggards.” The former are companies that harness data and analytics for a competitive advantage, and the latter still struggle to manage and exploit the full potential of their data.
Commenting on some of the key findings in the survey, Jeff Conway, head of State Street Global Exchange, says: “We put the business together in April of this year on the premise that our customers were dealing with a heightened level of data and analytic challenges and they’re asking us to play more deeply in a space of solutioning for and with them. At the time we said we have a view of what our customer base is looking for, we have a view of what capabilities we need to be able to solve those challenges but we’ve got to get deeper in specifically understanding what our customer base of institutional investors is looking for not only today but in the future.”
Since April this year, State Street has been building up Global Exchange and developing its data surveys to further understand institutional investors’ challenges in this area. Launched today, the business combines capabilities in research and advisory, portfolio performance and risk analytics, electronic trading and clearing, information and data management to help asset owners and managers gain new insights and execute investment decisions efficiently.
“Some of the highlights that resonate for me are that when you go out to this group of institutional investors, nine out of ten say that data analytics is a strategic priority for them, 37% say it’s the highest priority and 86% say that they’re going to increase their investment over the next three years in this space. So when you interpret that you come up with a view of who are the data leaders and the data laggards. It’s a matter of who feels comfortable in the area of their data position and who doesn’t”.
Conway notes that even the leaders, 29% of the total surveyed, are still spending significantly more in that space over the next three years and “that to me emphasizes the pace of change we’re seeing that those customers and institutional investors are dealing with. That is a very important theme.”
Further findings are that two-thirds of executives agree that leading-edge data and analytics capabilities will be among their most important competitive advantages in the future, 22% have a high degree of confidence in their ability to optimize electronic trading strategies and 22% think their benchmark data is a significant strength.
“The pace and volume of change in the financial markets are pushing institutional investors to become more nimble and wield data strategically,” says Conway. “Data without the ability to deploy it to solve a problem is just noise. As investment opportunities are increasingly harder to identify and more complex to execute, firms who can prioritize their approach to data management will emerge as leaders.”
According to the State Street study:
– 70% of data leaders are confident they can generate forward-looking insights from their data, compared to 43% of laggards;
– 72% percent are confident about integrating performance and risk analytics, compared to only half of laggards;
– 68% are very confident about being able to conduct scenario and stress testing investment portfolios, versus only 38% of data laggards;
– 92% of leaders believe their investments in data and analytics are keeping pace with the growth of their business, compared to only half of laggards.
Leaders are investing in smarter, faster investment decisions. Over the next three years, 89% plan to raise their investment in order management and execution management systems, 77% plan to invest more in portfolio modeling and optimization systems, 70% say they plan to invest further in benchmark data and 64% expect to increase their investment in risk analytics.
Majority of Institutional Investors Say Data Analytics is a Strategic Priority
37% of institutional investors say the accuracy of data is their highest strategic priority, according a survey highlighting the data challenges facing the investment community.