The topic of data is now a foundational topic within every function of an asset manager, with demand growing rapidly and technology becoming increasingly sophisticated. COVID-19 has focused minds on the importance of data as a cornerstone of the operating model. In Alpha’s second comprehensive global survey on the theme of data, we explored levels of data maturity across the entire enterprise operating model and found that firms are experimenting less, but spending much more on firm-wide data initiatives.
The impact of having an effective data strategy and mature data capabilities has never been more important. In fact, other recent industry research has revealed that firms with greater data maturity were able to better cope with the operational demands that the pandemic brought (State Street Growth Readiness Survey, 2020). This, coupled with pressure on margins, emerging tech disruptors and an increasingly complex market, highlights the need for asset managers to further improve their data capabilities and simplify their operating platform.
Alpha’s study explored how far asset managers have come in establishing foundations for data management, across both technology infrastructure and governance. To understand data maturity across the business, the survey addressed a broad range of topics through all aspects of investment management, looking at Investments, Distribution, Operations and Compliance. In total, 38 asset managers representing c. £9 trillion AUM participated from across the globe, including EMEA, North America, and APAC. This article presents our key findings and the main themes from the research.
Progress has been slow
2020 saw firms make concerted efforts in improving data governance and data foundations, however there is still a lot more to be done. Our data maturity curve shows that asset managers have been slow to improve their data capabilities, with most (59%) still describing themselves as ‘Getting Organised’. Despite greater levels of investment and focus in the last few years, nearly a quarter (22%) are ‘Frustratingly Fragmented’ and 14% are only ‘Living with the Basics’. This is potentially due to a reliance on legacy data initiatives and functional silos which are holding firms back, resulting in a lack of any ‘Data Innovators’. However there have been a number of announcements from asset managers and vendors regarding data cloud ambition particularly with emerging tools like Snowflake, DataBricks and Cloudera.
According to Alpha’s Data Strategy Index, a proprietary measure of data ambition, large asset managers are ‘on the offensive’ with data, and without significant investment mid-sized firms risk being left behind, a trend that we find is even stronger this year compared to the last. Large asset managers are now pulling away from the rest of the pack. Using data to ‘win’ is becoming a battle fought at the top and may play a part in driving future industry consolidation.
ESG data and continuing the journey to the cloud are key focus areas
Despite only 16% of firms having no plans to move to the cloud, asset managers are divided in terms of where they are on this journey. This highlights the differences in levels of maturity and should act as a call to action for those who have yet to act and risk falling behind.
Firms are attempting to keep up with the increasing regulatory and client demand for ESG investing and the additional hurdles that come with it. However, they are coming across multiple challenges which vendors will be trying to respond to as they develop and improve their offerings. ESG data needs to be used across the organisation, incorporated into the firm’s operating model and aligned to the enterprise data strategy. We find that asset managers are frustrated with the additional complexity and effort needed to manage data from multiple sources, resulting in most wanting aggregation which would drive increasing standardisation across the industry.
Exploiting data to drive business growth and deliver better client experience (CX)
Process and data-heavy investment and risk applications have been the traditional focus for advanced data techniques such as AI and machine learning. However, we expect to see leading firms make significant advancements from within their Distribution functions, as Sales and Marketing teams are increasingly leveraging these for their CX and sales enablement. So, while AI can continue to deliver benefits through process automation and simplification in already data-driven functional areas, there is also a significant expectation of improved customer experience & retention.
Our research has revealed that asset managers are still facing substantial data challenges which have slowed down the progress they wish to make. However, responses remain fairly optimistic, with large amounts of investment still pouring in and a greater focus on some very interesting areas. Three key areas (Moving to the Cloud, ESG Data and Generating Insights) have come to light through our data, leading to highly engaging discussions at our roundtable sessions.
Firms need to remain patient and ambitious, follow through with their plans and ensure they are keeping an eye on an ever-changing landscape to remain competitive and avoid falling behind. Asset managers who make the most of the opportunities available will find themselves having a competitive edge that makes their current tasks (and certain challenges) easier, smoother and more value-adding.
To hear more about our experiences helping firms to accelerate their data journey and transform the data operating model, or to find out more about the research please contact us at email@example.com.
A summary of the Data Operating Models 2021 research report can be downloaded here: