Data-as-a-Service in Asset Management: A Great Leveler?

Chris Rushworth, Burak Diplen, Charlotte Ke

Data is key strategic theme for many asset managers, with most firms either actively implementing or crafting a data-centric strategy. In our latest Data Survey, all firms reported focusing on at least one aspect of Data in their strategy, the most common being Data Management & Operations (88%).

The overarching goal of a Data strategy, regardless of the size of the asset manager (AM), is to transform data into a strategic asset—eliminating informational silos and enhancing data quality and accessibility. These improvements serve a spectrum of strategic objectives within a firm, from bolstering alpha generation and investment research to streamlining client reporting processes.

Successfully achieving such goals is a challenge, with larger asset managers typically having access to greater data resources and capabilities, while smaller ones may lack the scale needed to keep pace. This disparity has and will continue to widen over time, driven by client, regulatory and employee expectations. All expect frequent and prompt access to data that they can manipulate and interpret in their own way. New technology itself also becomes a consumer of data, with the disruptive potential of generative AI only truly accessible to firms that already have well-curated ‘data assets’ in place. Data-as-a-Service (DaaS) has the potential to narrow this gap and provide medium & small-sized managers with access to capabilities that were previously out of reach.

What is Data-as-a-Service?

DaaS is a managed, cloud-based service that provides users with access to core Asset Servicer or investment platform data as part of a scalable, quality assured data warehouse and set of analytics tools. Some versions of DaaS also include the ingestion of provision of third-party data from vendors or even the client’s own data. While each differs in terms of maturity and customized services, almost all major Asset Servicers and investment platform providers operating in the Asset Management space have developed offerings. These solutions encompass the entire data value chain, addressing aspects that prior enterprise platform configurations have failed to cover.

The exhibit above illustrates the data value chain by major vendor setups. A key highlight is that asset managers now are enabled to work with one single vendor within “DaaS in asset servicing setup”. This marks a substantial simplification and optimization of data management for asset managers.

What are the benefits of using Data-as-a-Service?

The potential reach of DaaS across the data value chain promises a range of benefits. We’ve outlined major benefits for asset managers, particularly medium and small-sized, in the below exhibit, based on discussions with our experts, clients and vendors.

What do these new offerings mean for the industry?

All sizes of Asset Manager can benefit from DaaS offerings, especially the core capability of landing Asset Servicing or investment platform data (e.g. IBORs, ABORs et al.) in a cloud data warehouse. For all sizes of manager this offers the opportunity to outsource the non-differentiating task of landing and distributing data from outsourced services to core systems and users.

However, whilst DaaS offerings could be good for large managers, they could be transformational for small and medium firms. As we observe above, some firms don’t have access to the same data capabilities as large firms, potentially hampering their ability to develop custom data and technology solutions, and in turn, hampering their ability to scale their IP, investment process or client servicing approach beyond ‘off-the-shelf’ platforms.

In this scenario DaaS could be a ‘great leveler’ for those small and medium firms – with high quality core data delivered into a flexible data warehouse and their existing Technology staff freed to focus on differentiating solutions, the ability to customize and build solutions as large managers do, could well be within reach.

How can Alpha help?

Through our extensive experience with asset managers globally, and our Data expertise, Alpha are well-equipped to help you navigate the DaaS landscape, understand the options available and select the most appropriate solution for your needs. If you would like to have a conversation to understand how Alpha could support you, please get in touch here.

About the Authors

Chris Rushworth
Associate Director

Chris is an Associate Director with over 18 years’ experience of leading change and transformation at FTSE 100 and leading financial services firms. He has a broad exposure to technology and data in financial services having worked on projects across asset management, wealth management and retail banking, both in industry and as a consultant.

Burak Diplen
Senior Consultant

Burak is a member of Alpha’s Data Practice in Europe and Benchmarking Practice in the UK. With a background in supporting financial institutions, he has experience in developing strategies and overseeing organization-wide transformations in areas like operations, data, and product development. Recently, Burak played a pivotal role in supporting a Europe-based asset servicer in developing its new platform offerings and designing Target Operating Model.

Charlotte Ke

Charlotte is a Consultant in Alpha's Asset and Wealth Management division. Since joining 3 years ago, Charlotte has supported the UK Data Practice, where she has been heavily involved in the creation and annual running of the Data Strategy & Operating Models Survey, as well as the Benchmarking team, where she has run large-scale global benchmarking projects and conducted financial and service level analysis on outsourcing tariffs for both Asset Managers and TPAs.