Advanced Analytics and Big Data technologies are on the verge of transforming the investment management industry. The provision of deep insights into market, financial, social and client data will facilitate innovative ways to engage with new clients, manage client relationships, manage risks and reduce costs.
Alpha is seeing increasing focus from both larger global investment managers and smaller independent players on data management, particularly in the following areas:
- Best Execution and associated Transaction Cost Analysis (TCA)
- A growing recognition of the underutilisation of Data; firms are looking to unlock the value that exists when market, financial, social and client data are combined to provide actionable insights
- The evolution of Cloud Technologies, which are driving transformational change in the industry. Focus is moving from a concentration on hardware and infrastructure to a multitude of service offerings which enable firms to turn their attention to making the best of their corporate data asset
We have consequently seen a rise in the popularity of Master Data Management (MDM) solutions which, together with the development of security master, product master and client master platforms, form the corner stone of the Enterprise Data Management (EDM) strategies for our clients.
What are the challenges?
- TCA accuracy is predicated on pricing data quality, cost decomposition, benchmark selection and the aggregation of results. Firms need to identify which trade flows and asset types to include, which elements of the lifecycle to consider and how to deal with outliers or compliance failures. Furthermore, how such analysis will be used within the firm needs to be defined; will the analysis provide summary or detailed outputs? Will the outputs provide alerts? Is there a requirement to deliver a feed to pre-trade decision support solutions?
- Whilst firms may hold or have access to a large amount of data, often this remain underutilised and ‘locked’ in corporate databases; data rich, information poor. A key challenge for firms is how to leverage this data to derive valuable information. This requires a mix of resource and capabilities. How firms set themselves up to take advantage of the possibilities within their data and deliver access to the requisite capabilities is at the heart of solving this issue
- MDM solutions are typically complex and require effective governance to deliver on the promised benefits. Breaking down the task by subject area, and adhering to a set of clearly defined principles, enables firms to deliver a faster Return On Investment (ROI).
How can Alpha help?
Alpha has supported clients in the following ways:
- Data Management Strategy – we have supported investment managers to define model that maximise the value in data assets and address Technology, Processes and Organisational structure
- Exploratory Data Analysis (EDA) – we can perform EDA to extract maximum insight from data sets – uncovering the underlying structures, extracting important variables, detecting outliers and anomalies, testing underlying assumptions, developing parsimonious models and providing cost/ benefit analysis of data engineering initiatives
- Data Engineering – Complementing EDA, data engineering provides confirmation that the data is fit to realise the value identified in EDA.