TSAM Recap: Managed Services Becoming Key Piece in Data Quality Puzzle

Jeremy Skaling, ‎Managing Director, Head of Product Management

meetingData quality was in focus at TSAM New York in June. In a panel on the topic—as part of a discussion that ranged from data lineage to data domains—I had the chance to highlight the continued focus within investment managers to employ data management best practices. These best practices include a comprehensive data governance program that aligns business owners with technology solutions and service providers.  By deploying best practices, firms find that data management can be as much about ensuring data quality as it is about finding new efficiencies. As a result, we are increasingly seeing that investment firms are considering new ways to integrate managed services into a more comprehensive data governance strategy.

As I underscored at TSAM, much of this has to do with the need for flexibility and agility, which are critical in today’s complex data environment, particularly in an industry as dynamic as financial services. Investment firms must have the right processes and disciplines in place to truly manage and govern their data.

This focus on data capabilities and best practices has served to shape Eagle’s business over time. In the late 90’s, when Eagle was a FinTech startup, we were a pure-play technology provider. When we introduced Eagle ACCESSSM, our secure private cloud, clients began to tap Eagle to oversee their technology. Today—as clients focus on their core competencies and, at the same time, recognize Eagle’s core competencies—they are turning their focus to managed services as a solution for staying on top of and ensuring the quality of their data.

Consider everything that goes into data management today, particularly as the volume and complexity of data grows exponentially with each passing year. The bandwidth required to stay ahead of the constantly changing inputs—be it security reference data, benchmark feeds, portfolio analytics, et cetera—is considerable, and internal resources are consequently stretched beyond their capacity. As firms begin to formulate or reconsider their data governance strategies, many are realizing that their data may not be receiving the requisite attention to ensure it is clean, validated and up to date.

Taking a one-off approach and outsourcing just one component of the data governance roadmap may not necessarily solve this issue either. If a firm chooses to outsource one domain of their data, such as the security master record, it does little to ease the back-office burden of integration and oversight required for things like ratings changes, alterations to benchmark data and corporate action notifications. For this reason, we are encountering an increasing number of current and potential clients who are seeking to hand over the entire integration puzzle to qualified third-party organizations—organizations that have the required expertise and that enjoy the economies of scale to stay on top of all of the different changes to the various data inputs that occur over time.

While the trend toward outsourcing and managed services is picking up steam, clients are no less conscientious in their due diligence to obviate vendor risk. As one panelist noted, “You can never lose sight of the fact that even if your vendors are unregulated, you still are.” It may be stating the obvious, but this is a key reason Eagle’s relationship with BNY Mellon represents such a critical differentiator for so many others exploring these services.  Still, we are finding that potential clients, when it comes to managed services, are quite granular in their vetting. They want complete transparency into how tasks are completed and deep insight into the operational support dedicated to specific functions.

In a lot of ways, the move to managed services in data management is no different than the trend that drove outsourced fund administration for the middle office. The ability to strike a NAV, for instance, offers little in the way of a competitive advantage, though it is critically important to reporting and running a fund.

Investment firms will keep in-house the technology and data management functions that help shape their value proposition and investment strategy. On the other hand, increasingly, firms will seek out qualified, expert vendors to manage the more routine tasks, like data validation and integration. Demarcating exactly which functions add differentiating value versus those that are more commoditized (albeit still critically important to day-to-day operations) can be one of the vital components in establishing a data governance strategy. Beyond introducing new efficiencies and allowing key resources to be redeployed, the adoption of managed services can equip investment managers with the proficiency and surveillance necessary to effectively stay on top of their data while efficiently growing assets.

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