Future of data management

Will fund management companies need data management teams in the future?

The complexity of investment data and the lack of global data standards has resulted in fund management companies investing in specialist teams and software packages to manage the challenge of populating front office systems with quality data.

Frustratingly for most fund management companies, whilst a significant amount of resource and cost is tied up in data management, no real competitive advantage is obtained as the majority of fund management companies have identical teams supported by identical software packages.

Given that data management functions in most fund management companies are focused on ensuring externally sourced data is of a good enough quality for front office use, this looks like an obvious candidate for outsourcing, as economies of scale should lead to cost reduction in both personnel and market data.

A number of third party administrators have tried to provide this service to their clients over the years with varying degrees of success. However, I think it more likely that it will be a data vendor who provides a credible ASP data management service; I think the two companies who are best positioned in this space are Markit and Bloomberg

Bloomberg have led the way in this space by their acquisition of PolarLake and announced its managed EDM service in 2013. In the last 12 months PolarLake have dramatically increased the number of data vendors it can provide and obviously has high integration with Bloomberg data. With Bloomberg’s AIM platform tagged onto the front of this data management system, Bloomberg can credibly provide a fully managed set of data all the way to the fund manager.

Markit are a much newer kid on the block but their acquisition of CADIS and thinkFolio shows they are heading in a similar strategic direction as Bloomberg. Whilst Markit are happy to sell each of their software products individually, the goal for them must be to provide their clients with a fully populated thinkFolio system along with data management supplied as part of the service.

So will fund management companies need data management teams in the future? For me the answer is yes but performing a different role in the organisation to now. Instead of spending most of their of time resolving data exceptions, the data management team in the future will be much more focused on working with the front office to understand their data requirements for new products and services and then working with suppliers to deliver that data, now that is where the real competitive advantage lies.

May 2015