Addressing the Challenges of Buy-Side Data Management in Australia

Joel Kornblum recaps his panel from Eagle’s recent Data Management & Performance Analytics event, sharing the opportunities and challenges facing the investment industry as it takes control of its data.

Joel Kornblum, Global Head of Strategic Alliances & Consultant Relations

With assets exceeding $1.9 trillion, Australia is home to the world’s fourth largest market for pension assets, according to a study published last year by Willis Towers Watson. The same study highlighted that the country has enjoyed the fastest growth rate over the past twenty years, reflecting Australia’s embrace of innovation—first, in creating the superannuation system in the early 1990s and, also, in assuming leadership positions in developing asset classes, such as infrastructure. Yet, despite the size of the market, the state of data management in Australia is still evolving and maturing. The relatively young state of data management in the country has created a major opportunity for both superannuation funds and independent asset managers to review and implement best-in-class solutions. In fact, Eagle has seen considerable interest in our continuum of solutions to support the evolving data management needs of the market. Australia not only has the opportunity to catch up to the rest of the world, but undoubtedly leapfrog other regions while embracing cloud-technology and managed services to bring new capabilities to bear.

Eagle recently sponsored a Data Management and Performance Analytics event in Sydney where I hosted a panel entitled, “Addressing the Challenges of Buy-Side Data Management,” with a special focus on the Australian market and experience. Those who participated on the panel included: Brad Farrell, Manager, Data and Analytics Solutions, Colonial First State Global Asset Management; John DiBiase, Managing Director, Shoreline Consulting; and Alexis Walker, Director, Asset Servicing Australia, BNY Mellon.

After arriving at a common definition of data management, the panelists shared their insights into various challenges that are impacting the industry’s ability to plan for, manage, and deliver timely fit-for-purpose data to meet business needs.

A common theme that emerged was the obstacle of reconciling the differences between systems and ensuring that the data aligns, while remaining fit for purpose. Different systems have different strategies for storing and processing data, so when it’s communicated or shared with another system or vendor, translation complications can pose challenges. The panelists all shared their experience of the spaghetti point-to-point diagrams they have all seen, citing how difficult and time-consuming it can be to connect disparate sources and untangle the bad data from the good. The inefficiencies alone can create pronounced bottlenecks that affect the entire enterprise, but far worse is the ensuing organizational distrust of the data. The result is skepticism of an immature or poorly planned data management strategy, ultimately calling the entire data management initiative into question.

The panelists agreed that a data governance strategy is a key tenet in achieving effective data management. But while it may seem like a monumental task, defining the data governance model—complete with a thorough business glossary and data dictionary that defines ontological standards—can keep all parties in agreement while maintaining and utilizing data. This is one of the first steps suggested to progress data management transformation projects.

The industry beyond Australia has seen the role of Chief Data Officers grow in number and standing, but it has not yet become the norm in Australia. The panelists agreed that this may simply be due to the inability for Australian firms to justify the position as a standalone function based on the size of a typical organization. As long as the organization agrees that there is executive ownership of the data and it is an asset that needs to be managed, this would not be an impediment to executing a strategy.

Alexis Walker also emphasized the importance of having an end-state in mind. “Understanding what your current problem set is and what you will need at the end of the journey—versus all the ad hoc items that have been bolted on to support new investment strategies—is very important.”

There are many drivers for firms, including rapidly growing and increasingly complex regulatory demands, that are heavily data dependent and may also require the sourcing and integration of additional data and data types. Still, the catalyst to reimagining the data function may be driven by the opportunity, not the obligation.

In the past, most firms would look for a solution that was often technology based, but the evolution of the data management function and the maturation of capabilities has not only affected the vendor/client relationship, but in some cases, the operating model as well. The panelists were in agreement that the service provider role is changing. The focus is more than simply providing software solutions to fix the problem; it’s about providing software, managed services, and consulting services to offer a continuum of options to fit the unique needs of each firm. Given the pace of technology innovation and evolving regulatory standards, this allows investment firms and asset owners to be agile in their approach to next-generation data management.

Indeed, this level of flexibility is key for transformation, facilitating the adoption of new technologies—like artificial intelligence (AI) and robotic process automation (RPA)—that promise greater operational efficiency and a more personalized customer experience. This is why so many firms today can appreciate the role of data as an asset, and why Eagle has noticed such growth in the demand for managed services and cloud-based data management capabilities.

To truly leverage data and apply it to the business, buy-side firms must abandon what has been a reactive and tactical approach and instead embrace a strategic mindset. This will allow firms to address upcoming challenges as well as unknown future hurdles. And through partnering with a service provider that has deep expertise, a proven track record, and commitment to reinvest in the product set, firms can provide a true competitive advantage that positions the entire organization to truly leverage their data and make it work for the business.

Leave a Reply