Earlier this month representatives from major financial services firms and fintech vendors gathered in Munich for DFK 2016. The event was organized to discuss digital disruption in financial information services and the growing importance of big data and fintech in dealing with regulatory challenges.
The packed program comprised speakers from a wide range of businesses including Deutsche Bank, BVI and Thomson Reuters, as well as the RIMES BDS Service Manager, Giles Arbuthnott; and featured debate on subjects including the importance of ratings and benchmark index providers to the asset management industry, digitization and the rise of virtual balance sheets and the impact of fintech on compliance.
From RIMES’ perspective DFK 2016 was the perfect opportunity to reiterate why firms should think twice about managing their own data. In his presentation, Arbuthnott reiterated just how complex data management has become for buy-side firms, with in-house teams responsible for ensuring the increasing volume of benchmark and reference data flowing into the firm is fit for the requirements of each destination function.
For example: when it comes to providing data for performance management and attribution, required when preparing performance reports for clients, data teams often have to source, remediate, transform, store and feed data into the relevant reports. And this highly complex process needs to run in line with similarly complex management processes for the other core functions: portfolio management, order management, risk management and back office accounting.
Linked to this growth in complexity is the fact that the costs of managing data in-house are also rising fast. Arbuthnott quoted industry figures, which show that the average number of FTEs required to meet data management costs is already 3.24 for data management alone and this figure will increase rapidly as the data volumes handled by firms continues to grow.
Having established that the complexity and cost of managing data in-house will only go up, Arbuthnott made the case for managed data services. The quantified benefits of using managed data services are clear and compelling: from improved productivity and increased operational efficiency to IT data resource savings with an improved data feed and delivery maintenance. Crucially, with an enhanced ability to scale to meet growing data requirements, Arbuthnott showed that managed data services remove the need to increase headcount at firms.
Of course, quantified benefits are only of use if there is no adverse effect on the quality of data. To conclude his presentation Arbuthnott demonstrated that in fact managed data services enhances the quality and accuracy of data for firms by up to 20 percent. As a result of access to pool of data experts and being able to automatically leverage the scale provided by managed data services, buy-side firms can enjoy increased agility and responsiveness, an enhanced customization capability and improved risk management and compliance.
Improving data quality is a top priority for buy-side firms and Arbuthnott was able to make a strong case for managed data services; showing how the right service provider can enhance data transparency and quality and drive agility and control in an increasingly complex environment.
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