More than a quarter of decision-makers in buy-side financial firms (28 per cent) cite fragmented and unreliable data management infrastructure that struggles to cope with increasing data volumes as the biggest data management challenge they face, according to the results of a survey by market data integration and analytics solutions provider Alveo.
A further 8 per cent meanwhile, highlighted a problem with IT bandwidth, stating: “Our IT teams are overrun and cannot focus on strategic initiatives or improvements”, according to research conducted by Alveo, the leader in market data integration and analytics solutions for financial services.
Many also report low data management maturity. Nearly a quarter (24 per cent) of the sample rate themselves low on the scale of the CMMI Institute’s Data Management Maturity Model: “Data is managed for ad hoc requirements. Processes are typically not applied across business areas. Process discipline is primarily reactive; for example, data quality processes emphasise repair over prevention. Foundational improvements may exist, but improvements are not yet extended within the organisation or maintained.”
Just 9 per cent claimed to be at the higher end of the CMMI Institute’s scale where: “Data is seen as critical for survival in a dynamic and competitive market. Process performance is optimised through applying analysis on defined metrics for target identification of improvement opportunities. Best practices are shared with peers and industry.”
Martijn Groot, VP Marketing and Strategy, Alveo, says: “Many buy-side firms are overwhelmed by the data management challenges they face – from quickly onboarding and integrating the content they need in the investment management process to keeping up with client, investor and regulatory reporting requirements. Many feel that they are running to stand still and need to rethink their data management and analytics to properly provision their business.”
The survey also identified more specific data management challenges buy-side firms face including the collection and aggregation of environmental, social and governance (ESG) data sets. Just 45 per cent of the sample says their organisation centralises the management of market and reference data, something which can make data more accessible, usable and secure and harvest all the data assets in a firm.
More than three-quarters (77 per cent) say their organisation requests the same data multiple times from a single data vendor, leading to unnecessary duplicate data costs. Many firms are open to help here. When asked would their organisation seriously consider outsourcing market data management activities to a trusted third party, 64 per cent said “yes”.
As Groot states: “On the data management side, there is a growing emphasis on rigorous processes with clear data lineage, data quality assurance and governance, both for compliance and operational efficiency. Buy-side firms know they would struggle to deliver this on their current in-house often homegrown solutions. Outsourcing the work to a trusted third party partner offers them an attractive, alternative route map forward.”
