One popular definition of madness is doing the same thing over and over again and expecting different results each time. The history of market data management within financial services firms comes to mind as an apt example of this! The continuous cycle of data management projects involving new technologies, expertise and processes invariably produces the same results, but with ever increasing costs, complexity and risk. Perhaps it’s time for firms to stop, step back and look at trying something different?
What are firms trying to achieve?
Before we address the madness itself, let’s first look at exactly what investment management firms are trying to achieve. Simply put, they need to be able to source data and deliver it – fit-for-purpose – for any number of different systems or processes throughout the organisation. In this case, the data’s fitness is defined as the optimal balance between timeliness, quality, integrity, consistency, system-readiness and cost – for each individual data owner and consumer. How hard can that be? Pretty hard when considering that with an industry-wide cost of more than $28 billion per year, market and reference data is often cited as financial firms’ third-largest expense, behind staff costs and office space. (Waters Technology).
Are firms really repeating the same mistakes?
You can argue the semantics as to the technical differences between early accounting systems used as primary systems, through to the development of centralized storage, data hubs, and first and second generation EDM systems. However, they are essentially trying to do the same thing but with increasing volumes of data. Namely, to centralise it into a single master copy via processes that include standardization, validation, reconciliation, and eventually multiple transformations of the data for consumption, all within a data governance wrapper.
How efficiently and accurately these processes are carried out provides some competitive advantage, but removing that from the equation, the incoming data is the same for any company, so in itself provides no inherent competitive advantage. It’s only how the data is used that differentiates one asset manager from another. Considering the volume and complexity of the data required is tripling every year, every firm building or adapting its own inhouse data management system, or EDM, is a constant and costly repetitive cycle, the futility of which suggests a strain of madness.
So how is the cycle of madness broken?
It would be easy to say that the answer is to create a centralized master copy of all the required market data, from which all firms can take the data they need. There have been thousands of hours spent by many altruistic individuals to build common data sets with detailed dictionaries to create the ultimate utility model. This work has undoubtedly benefited all participants in the financial markets. But there are too many competitive forces – the dynamic drivers of our financial markets – that make the utility model a Utopian dream that can never be fully realised.
The answer is to look to a solution that provides the efficiencies of the utility model with the control of an in-house solution, and with the agility and flexibility to adapt to an ever-changing data environment, without the costs and risks of repeatedly building, normalizing and destroying the solution every few years.
With the RIMES Managed Data Services, you have access to all the data you need. At the same time, each end consumer can provide their requirements, and the RIMES MDS solution will feed the data to each consumer fully optimised to their requirements – no compromises. Through inventories and business information reporting, clients get the governance wrapper they need without further investment in those systems.
All the investment in people and technology to meet the continuous evolution in data needs is carried by RIMES. However, through economies of scale, those costs are a fraction of the combined costs of each client doing it themselves. We have the proven expertise and proprietary technologies to meet the individual needs of our client base and have proven our ability to keep adapting to meet the increasing volume and complexity of asset management data needs.
Only with RIMES MDS can firms break the cycle of madness.
All Systems Go?
Effective data management is not merely about operational efficiency. It can also have a significant impact on your firm’s reputation and create or hinder a competitive advantage. Our clients consider data to be a strategic priority, which is why they rely on RIMES to ensure accurate and timely delivery of high quality, fit-for-purpose data across all systems and to each user. Learn more: www.rimes.com/go
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