STANLIB Asset Management

Investment management thrives on data. Perhaps, more than in most industries, the power of more information is recognized as a competitive edge. Data that enables managers to know more about an investment’s payoffs and risks and have a clearer picture of the future translates into higher returns for investors. And higher returns make for happier clients. How can investment managers put the right data into the right hands and achieve extraordinary results to differentiate themselves from competitors?

Increasingly, investment managers are looking for data to deliver more than just investment alpha for clients. Clients expect an exceptional service experience, and investment managers are faced with the burden of complex operational and regulatory risks of managing money.

STANLIB Asset Management recently embarked on the modernization of its data ecosystem to deliver the organization’s strategic goals. Our experience through the program has shown that the successful future of asset management relies on four key elements: rich and connected data made available via a trusted ecosystem, which enables human skill and curiosity to collide and flourish.

Rich and connected data

The decision-making required to improve investment performance, deliver exceptional client service, and reduce operational risk is complex. This complexity cannot be approached with simple data. Just like an effective mosaic requires multiple, multi-colored, unique tiles to be combined to create an overall image, complex decision-making requires multiple sources and types of data to reach a fully considered result. In investment decision-making, this could mean satellite imagery, sensor data, or earnings announcement voice recordings, which are added to price tickers and other market data. In client service, more than knowing a client’s portfolio holdings, we need to track a client’s interactions across multiple digital and analog platforms and even determine their engagement tone to determine the level of service recovery required. Investment managers will increasingly need to create unique and ingenious data sources to derive a competitive advantage.

The investment management industry thrives on data, but more data is not the key to the future. Success will rely on combining richer and connected data on trusted platforms and placing it at the fingertips of skilled individuals with the desire to do things better 

More important than the variety of sources is how they are connected. Data silos inhibit the power of data and our ability to see the mosaic image that it presents. A call center agent who is trying to resolve an issue with a client is empowered if they can understand the client’s level of frustration (through machine learning text or voice interpretation), follow the client’s previous interactions with the company (including website engagements, voice recordings, and email communication) and gauge the level of help the client needs. The connectedness of the data gives a richer image of the client and drives more meaningful engagements.

An ecosystem to bring it all together

The connectedness of data must be driven through platforms or systems which are combined into a data ecosystem. Numerous technology solutions are available to companies wanting to modernize their ecosystems, and each one offers its own benefits. The selection of technology will be heavily influenced by an investment manager’s nuanced needs. There are, however, fundamental aspects to consider.

• A multi-provider cloud-based architecture: cloud-based architectures, and particularly platforms provided as a service, help organizations to achieve flexible scalability and allow internal resources to focus on data insights instead of data management. Flexibility must cover both storage and computational power to cope with the increases in data volumes and the evolving demands of multiple users.

• The ability to cope with structured, semi-structured, and unstructured data. While a large part of traditional data use has focused on rows and columns of data, there is untapped richness in unstructured data such as voice recordings, sensor data, and images.

• Transparency, so that users know how data sources have been connected, what logic, rules, and filters have been applied, and how the end result was reached.

• The agility to cope with the ingestion and provision of new data sources at speed.

• Flexible end points. As the number of citizen developers increases, each of whom has their own preferred toolsets, the ecosystem must enable the use of data in these preferred tools through flexible end-points - nodes that can provide trusted and controlled data in a variety of formats, including APIs, spreadsheets and text formats.

• The promotion of effective governance using tools that are baked into the ecosystem. The volume and velocity of data, and the fast-changing nature of an organization, demand systemic governance to protect data, control who has access, ensure data is appropriately masked, and measure data quality. The organization should be able to prove that these controls are in place for both internal and external audit functions.

The aim is to deliver an ecosystem that is trusted, agile, and can scale up with the business needs. It must deliver what the organization needs now and enable what the organization may need in the future. It is impossible to divine what the future of investment management will be, but the implementation of a strong technological foundation with trusted data is a sure starting point.

The skill to know what to do with the data

The data and ecosystem in an organization are fruitless until they are brought together with human skill. We are experiencing incredible developments in our industry, and every role of investment managers now involves the creation, analysis, or application of data. There is an opportunity to develop a competitive edge, both for organizations and individuals, through data and analysis skills. We need to train and retrain employees in data literacy, mathematics, statistics, coding, and machine learning. The challenge is to ensure that there is parity in the pace of technical and skills development in the organization. A powerful ecosystem, which remains unused because of a lack of skills, is a wasteful expenditure. Highly skilled staff with no supporting data or architecture to use will become frustrated. Achieving parity requires considered investment in both technology and skills development.

The curiosity to explore and action

Curiosity is the matchstick that sets data on fire by blending technology with human skill and knowledge. It is the hunches and gut feeling that something looks odd or interesting that, when backed up by data, can lead to insights and decisions which yield a competitive edge. This can happen at any level in an organization, and leaders should ensure that the other elements of the recipe - rich and connected data, a trusted ecosystem, and skills - are in place to enable this curiosity. Within a governed environment, employees should have access to data and skills to quickly prove or disprove a hunch, to combine or create unusual data sets, and, crucially, to experiment with data-enabled ideas. An organization should aim to deliver snippets of data insights to promote discussion and idea generation and should create a platform for employees to share their insights at the appropriate levels to make data-enabled change happen. All of these factors help to shape the data culture of an organization, which becomes a self-fulfilling loop.

The investment management industry thrives on data, but more data is not the key to the future. Success will rely on combining richer and connected data on trusted platforms and placing it at the fingertips of skilled individuals with the desire to do things better.