One data source to rule them all

Phil Pietersen

By

03/01/2017

OPINION | Superannuation funds still sinking precious resources into managing data and operational processes manually will struggle to stay one step ahead of the competition.

With the retirement savings industry changing at break-neck pace, making an investment in new technology to automate, centralise and streamline is essential for longevity.

Investment management has always been a fast-paced industry. Technology has the potential to reduce the burden of constant change significantly. But adding piecemeal technology isn’t the answer.

Ad hoc solutions are being introduced for improvements to separate systems but they can lead to dangerous silos. New software must be compatible with existing technologies and be accessible across investment management operations in order to provide an integrated solution that offers a single source of truth through centralised data management.

Reduce human error
As a relatively young industry, the superannuation sector continues to use manual processes that are prone to human error. When using a multitude of spreadsheets, particularly across multiple roles or departments, one error can feasibly devastate a whole day’s work. Having a single source of truth through centralised data management eliminates that human error in the initial processing stages of daily data.

Enable human talent
When investment managers are freed up from manual checkpoints and data administration, they’re able to focus on their real responsibilities. Once they’re confident that they’re working with the correct data, they can focus on the complex analytics and strategic planning they were employed to do. The time gained can enable deeper thinking and open the door to innovation.

Increasing data integrity
When it comes to data, the numbers themselves are almost secondary to their reliability, making data integrity the cornerstone of accurate decision-making. Technology increases the speed at which investment managers can make confident decisions and improve their advantage against competitors who do not have integrated platforms.

Streamline data across all functions
A centralised data system ensures that everyone, across all operations, has access to the same information. A single data source – used by everyone from front-office support to trade-capture systems, to portfolio research teams – ensures no duplication of efforts. And with cloud migrations becoming increasingly common, data can be accessible at all times. Many industries are already using internet-based architecture as a flexible and secure solution, and investment management will certainly follow their example in years to come.

More transparency and accessibility for the investor
Consumers are changing. The public is more interested in where their money is being invested, creating pressure for transparency. All financial services providers will need the ability to easily disseminate an accurate and accessible breakdown of investments. Those that can’t may put their reputation at risk over time.

Centralised data management software has the potential to automate, reduce complexity and, ultimately, increase returns. Although many believe technological changes are inevitable, there are still pockets of resistance within the industry, along with legislative restrictions. As investment operations mature, centralised data systems will facilitate increased information security and risk management.

Regardless of current technology capabilities, data is at the core of every decision investment managers make. Using centralised data to create operational efficiency doesn’t necessarily provide an advantage in and of itself, but it releases investment managers’ time to find income potential in a low-returns world.

Processing and discovering information not readily available, evaluating the changing value of assets and analysing data implications are all real benefits of centralised data management – and with those benefits will come a true shift in investment management.

 

Phil Pietersen is the managing director of ClearPoint, a data management firm he co-founded in 2007. ClearPoint developed AlphaCert, a purpose-built, customisable investment management operations platform that provides authenticated centralised data management.