Engage 2015 Coverage: Investing for Growth

Stephen Johns, Manager of EMEA Services Delivery EIS


It’s an age-old question: what comes first, growth or the capital investments that drive growth? At a panel Tuesday morning, “Growing Assets Efficiently,” four executives discussed their approach to this strategy question and highlighted that while it can be difficult to make the leap and overcome certain challenges that come with doing so, their investments to gain control of their data have indeed paid dividends across their businesses.

A survey cited during the panel seems to imply that most organizations in banking and finance still view IT and technology as merely a cost of doing business. Indeed, 67% indicated they are increasing their “lights on” IT spend, while only 20% view this as an investment geared for growth. It’s no wonder that nearly one in three do not believe their IT budget meets an expected ROI, and, among those polled, the average spend on technology came in below 7% of revenue.

As one panelist noted, “Boards and CEOs will spend money on the revenue side, but nobody wants to grow their expenses.”

This mindset can prove to be a difficult roadblock for many organizations. The returns from investments in technology, while sometimes difficult to envision, will initially take form as cost savings in a newly automated world. Over time, however, these types of investments not only allow firms to grow assets through enabling new capabilities and strategies, but allow organizations to do so without having to add staff or infrastructure. As one panelist cited, since they’ve gone live with Eagle Data Management, they’ve tripled their assets under management without having to add a single employee to the back or middle office.

The biggest challenge the panelists discussed was overcoming the inevitable culture shock as technology can transform employees’ roles and responsibilities almost overnight.

“It was extremely difficult at first, as the transition from manual processes to an automated solution challenged the way we historically did things,” cited one of the panelists, a manager of accounting information systems for a large state pension.

Added another, a COO at a fixed income-focused fund manager, “It took time, but our employees began to understand that this toolkit can actually help make them more valuable team members… We’re not looking for a middle-office executive to become a trader, necessarily, but when they’re not spending time manually reconciling accounts, they can add real value through analysis and insight.”

With time, the value generated through technology and data management investments can become even more palpable.

“My team would spend an entire month processing data; now it’s done in about a week,” noted one another panelist, an executive partner at a London-based asset manager. He added that the firm was recently subjected to new reporting requirements as part of the Alternative Investment Fund Managers directive in Europe. “I’m not sure how we would’ve managed these requirements if we were still working off of spreadsheets.”

Of course, as organizations evolve, new challenges do emerge. As the pension representative cited, their biggest struggle now is managing the requests coming in to leverage the resource.

“It’s hard to even consider what we were doing three years ago,” they cited, which speaks directly to the value added.

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