Data quality has become an enormous carrot and stick for today’s investment management firms, according to new TABB Group research.
The carrot are the assets and revenues firms can attract by satisfying the demands of clients and regulators. All asset managers, states TABB, need “immediate access to accurate gold-copied positions and cash balances across all of their systems in order to achieve alpha, compliance and growth.”
Poor data costs
And the stick? Institutions burdened by inadequate technology that lack data synchronization capabilities suffer trading delays and trade errors that “could result in opportunity costs of up to 50% of revenue.”
The study found that manual processes are widespread – and expensive. It says almost 60% of asset managers’ front-office staff spend up to 30 minutes each day performing manual tasks such as offline and manual reconciliations and valuations, and fixing data for reports. And at firms where staff spend more than an hour daily on manual processes, “11% spend the majority of that time just resolving errors caused by poor data integration.”
That is a lot of valuable time taken away from what the front office should be focusing on: generating returns.
The bottom line is at stake
As the TABB research concludes: “Firms that are experiencing pain and costs in their trading processes due to inaccurate data across their various applications cannot afford to do nothing.”
A dedicated managed data service is a good place to start. Automating delivery of the multi-asset class data the investment manager needs, in a fully-validated, customized and system-ready format, goes a long way to ensuring the firm’s front office, risk management, portfolio management and performance measurement systems all work off consistent, high quality, accurate and timely information.
And by providing a consolidated source for the firm’s data delivery demands, a managed data service removes the need to employ in-house teams to manage those feeds, with all the complexity and cost that entails. As a result, asset managers can reduce the total cost of ownership of their data.
By leveraging a provider that can quickly add new data sources as required, asset managers will also have the scalability and flexibility to expand into other asset classes or geographies, giving the freedom to take advantage of new business opportunities wherever they arise.