On October 6th, RIMES hosted its fourth C-Level Round-Table, a client-only event where the firm discussed the latest data management trends and advancements with senior executives from its client firms. The round table meeting was designed to explore models for buy-side data management. There was also a particular focus placed on internal versus outsourced solutions for data management.
Models for buy-side data management
The discussion focused on how new technologies can help with buy-side data governance. It also touched on the importance for financial institutions to have an operating platform that enables them to take on new asset classes without going back to a ‘wild west’ way of conducting data governance. This is important because many operating platform initiatives are IT driven, which can create conflicts between IT and Data Management departments within a company.
However, due to regulatory, cloud information and mobility conflicts, companies will need to implement more effective data management to ensure that they have high quality, consistent information through controlled distribution. For many firms, they have several key needs for data and data management processes, specifically quality assurance and validation, ensuring consistency, data control, governance and checks on data suppliers and data service providers.
Many firms choose to use a centralized enterprise data management platform to address these needs. However, some participants at the forum highlighted issues around the EDM model. Chief among those concerns was the fact that EDM tends to be based on a point in time business case and that the centralized model means it can quickly become a data bottleneck.
In response to these issues with an EDM model, some firms are turning to managed data services for their data management requirements.
Internal vs. outsourced management data solutions
Some firms using managed data services still choose to retain elements of the EDM platform to trust and verify the level of service provided. This is due to the fact that the EDM layer is a check and control point for the managed data service, and thus used for quality assurance. Checks are placed where the risk sits.
More and more asset managers are pursuing the option of outsourcing specialist functionality offered by a managed data service. The idea of freeing up resources through bypassing the EDM layer and transferring all data checks to a managed data service is becoming a realistic option for many asset managers. But in the process of outsourcing, it is imperative that asset managers investigate the level of service they sign up for and how open they are to having managed data services check their processes.
Regardless of internal or outsourced data governance though, asset managers are responsible for all data going out the door. Therefore, they need to be able to demonstrate control points as well as provenance and lineage, as can be done with the help of a specialist managed data service provider. So while it is difficult to put a price on risk, it is the factor that needs to be mitigated against the most. This is the trade-off between utopia with 100 percent data checks and checking all suppliers, and priorities.
The value of managed data solutions
Managed data services might cost more upfront, but the services will pay for themselves with the time and money saved long-term, as, in the case of RIMES, has been proven in the recent The Total Economic ImpactTM of RIMES Managed Data Services study.
With more and more regulations in the pipeline, companies should be proactive and work with managed data services to adhere to regulations before they take effect. The reality is that regulators want to see control points. They want to know where the data is originating from, how it is validated and processed and what procedures were implemented. So no matter if EDM is employed or if a hybrid model with a managed data service are used, the demonstration of absolute control over the data will be necessary for regulators. RIMES can help firms address these challenges.