Investors have recognized the importance of data and analytics in an increasingly complex investment world, but have largely failed to implement adequate systems, according to State Street.
In a survey of 400 senior executives at global investment organizations, 81% of respondents identified data and analytics as one of their top strategic priorities. However, only 37% said they had advanced data infrastructures and high-quality governance.
“Effectively managing data is no longer optional, whether it’s big, fast, or smart,” Jeff Conway, head of State Street Global Exchange, said. “Organizations plagued by legacy systems, a lack of talent and weak data governance will miss the opportunity to extract investable insights from data without a clear vision.”
According to the survey, nearly one-third of asset owners and managers said they felt their biggest pressure was to improve data strategies due to increased interest in multi-asset portfolios.
“Effectively managing data is no longer optional, whether it’s big, fast, or smart.” —State Street
Not only is it difficult to obtain reliable data on alternatives, respondents also were challenged by integrating the information “to build a more integrated view of risk and performance across the fund,” the report said.
Investors said they were also pressured to modernize their data infrastructures as the demand for opportunities in new regions continuously increased. Growing volumes of trading data as well as stringent risk management standards were also top drivers of improvements in analytics, State Street said.
And as data and analytics become increasingly complex to keep up with equally complex investment opportunities and regulatory requirements, the report said investors would likely need strong governance.
Nearly one-third of respondents said integrating unstructured data would be the most difficult facet of a complicated data environment.
“Investment organizations need to focus on getting to the point with their data capabilities and building strong foundations—so they can gain a competitive edge in the high-tech investment model of the future,” Conway said.
A large majority (78%) of respondents said their investment in data and analytics capabilities grew at least 5% over the last three years. Institutions said they would continue to aggressively invest in data management systems, risk analytics, and electronic trading systems over the next three years.
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