Webinar: Optimising Data for a Competitive Edge

Over recent years, many customers of the asset management industry have experienced rapid technological developments in their personal lives, according to Kate Webber, lead product manager, fund services at Northern Trust.

Retail banks, for example, have long used online, automated, and other technologies to provide customers with choice, efficiency and service flexibility. 

Many asset managers are now driving the adoption of digital technologies to be able to offer clients similar servicing experiences – for example, 97% of managers in a recent survey said digital transformation was now a top priority.¹

As the use of data and digital technology becomes increasingly central to communicating with investors via more of their preferred methods , many asset managers are moving to digitalise traditional processes and practices. Digital technology will, Webber says, fundamentally disrupt both the manufacturing and distribution of funds – asset managers and their investor services organisations will need to adapt to the challenge.”

“Our path forward is the development of client-led solutions, which are centred on client needs and wants for the future – this will be key to success”, Webber said, speaking at a webinar hosted by Funds Europe in association with Northern Trust.

Webber says that, as asset managers seek to align themselves with client preferences and drive efficiencies and investment in their funds, a host of pressures are pushing them towards a crossroads in their use of data to provide insights and intelligence. But establishing a competitive edge can be driven in a number of ways and is not necessarily centred solely on scale, she says.

A valuable starting point are tools to help asset managers “delve through various platform layers” on the shareholder records to understand in more detail who their investors are.

“Once you are able to use data to understand your clients in more detail, it is possible to start to look at how you're doing individually, and what strategies you might adopt in particular markets or asset types,” Webber said, and while she believes that all organisations need to invest their data architecture, they don’t “need to do it in the same way”.

“Many asset managers are part of much broader organisations [which are] looking at ways of driving towards a more centralised data approach. The smaller boutiques might find that a much bigger ask and look instead to vendors and how they can gather pertinent data from asset servicing providers,” she said.

In the past asset managers tended to manage data in-house with their own bespoke systems. In part this was due to concerns about how to best protect sensitive and valuable information, yet the financial data aggregation industry has not yet found “an agreed way forward”, according to Webber.  The industry has always struggled in agreeing data standards to date and this will be a necessary component for the future. 

“We're still a bit focused on data ownership at both the asset manager and platform levels. It's my expectation that over time, we'll start to see a rolling-out of open banking approaches to the investments and savings industries,” she said.

For asset managers looking to transition to a more data-centric approach, the disruption caused by migrating to a new digital architecture can be significant.

“The broader question of the industry is whether we will foresee a time where we use a single set of platforms or industry utilities, and I'm not convinced that we're going to see that within my working life,” said Webber.

In an audience poll conducted during the webinar, 61% of respondents said their existing architecture is not capable of delivering the data needed to support future business requirements. This result surprised Webber.

“I expected a lot more people to answer ‘no’ to that question. When you start thinking about the scale of legacy technology use today, and the architectures that have been put in place – for example, as an asset servicing provider to the funds industry, we experience how it still operates using relatively outdated technologies such as batch overnight feeds and electronic faxes – I'd be surprised if many existing systems are able to meet the demand for real-time data in the future,” she said.

Adopting data-centric practices will aid in the transition away from legacy systems – potentially making more efficient and processes less manual, says Webber.

“We still operate in an industry where we take our valuable resource – our people – and ask them to pull together spreadsheets from disparate systems so we can create insights,” she said.

In response to these issues, Webber said Northern Trust is digitalising its asset servicing business to support new ways of managing and delivering real-time data to help drive its asset manager clients’ own digital transformation. For example, it will allow data to be linked to application programming interfaces (APIs) in the client’s own customer relationship management system.

“In this way, distributors can start to see valuable information in real-time, such as the investor assets being onboarded. This means they can monitor the success of asset managers’ sales campaigns much more closely. Data can then start to provide that momentum for greater competitiveness.”

Webber added that the asset services industry has to revisit their underlying architecture, be completely  honest with itself and ask, “can this architecture we have in place currently really enable data to flow?”

“Asset managers are going to continue to have pressure on margins, and they're going to continue to want to grow their assets, but in order to do that, they're going to need data. We have that data, but we need to make sure that we can flow it to them at the appropriate time and in the appropriate way.”

*Listen to the webinar here

Article also available at Funds Europe’s website here.

¹ Alpha FMC: The 4th Annual Asset Management Digital Readiness Survey, July 2021