Big data’: That’s the catchphrase in today’s climate of regulatory overhaul, and it’s something that hedge fund administrators are deeply focused on addressing.
Lonnie Macdonald (pictured), President of JD Clark & Company, the hedge fund administration division of UMB Fund Services, believes that the toughest part of delivering ‘Big Data’ is doing so in a way that meets the needs of each individual client. Minimal disruption is the aim of the game.
“People are funny about their data. They are used to how they receive it today and they don’t want you as their service provider to change that; they want to see it the same familiar way they’ve always seen it,” says Macdonald.
That would be fine if administrators only had to use one central feed with which to warehouse data. The reality is, however, that they must collate data from disparate sources.
“As a service provider we are forced to take a hard look at how we rationalise our core technology platforms and our data delivery to our clients. The technology platforms that we’ve used, historically, provide a patchwork of software and services. Orchestrating all these different technologies for data management and the provision of timely reports to clients is a daunting task for anyone in this business.”
To address the challenge UMB Fund Services has been examining and developing different options to provide what Macdonald refers to as ‘Mass Customisation’. These fall into two categories: in-house proprietary and commercial.
“On the commercial side we’re talking to firms like Paladyne, Advent etc, that provide tools to give clients better access to data. On the proprietary side, we’re looking at cutting edge options such as large-scale warehousing. And an emerging technology called Enterprise Message Bus (a messaging system to allow different systems to communicate through a common interface) to deliver data how and when clients need it.
“A large part of our annual technology spend is going into the improvement of data delivery to clients. You have to make sure you can deliver something that is mass customised to clients.”
Big Data and mass customisation are two sides to the same coin. Managers have to deal with huge volumes of fund data and they want it delivered the right way, at the right time to access at the click of a button.
Having access to this data, through a web portal for example, allows managers to slice and dice and customise things the way they want. Administrators collect data, scrub it, normalise it, and flag up any errors. Managers are given read-only access to this data.
To succeed in mass customisation, administrators need to understand what kinds of technology systems can overlay their administration platform and give clients this ability to reach in and manipulate the data without having to deal with their service provider every day.
The task of having to marshal data from different sources is getting more onerous, and indeed more costly.
As Macdonald concludes: “When it comes to regulatory reporting, we’ve devoted a lot of money to technology to ensure we are on top of everything for our clients and their investors. Both administrators and managers are under margin pressure. We’re all having to work together to absorb these additional costs.”