QAs costs continue to rise, paired with reductions in budgets for many investment managers, companies are perpetually looking for ways where they can differentiate themselves from their main competitors. What do you think organizations can do (or do better) to gain a competitive advantage over rival firms? How would they be able to do / implement this?
Each investment manager has unique attributes and qualities about them that make them special. Technology and Data needs to be able to support that as well as support the investment management vision in the future. Often, firms are stuck in the solving the day-to-day problems. While that is important, the greatest competitive advantage is in implementing technology to support your core uniqueness. That requires making an investment in finding these solutions. At IMP we conduct numerous system searches in a cost effective way that are far more effective than traditional old RFP process. Before implementing any solution, we also advise firms to conduct pilots to determine if the solution meets the needs of the business before making a substantial investment.
QCurrently there are more data sources available to people than ever before. How beneficial is this for data teams? What are the greatest challenges born from this proliferation of data sources?
Excellent Quality, Value, and Speed of your data provider should be a top priority. Vendors that excel in all three provide the biggest benefit to their clients. This will lead to investment managers having the confidence in the data to do their job. At IMP, when we engage data management projects we want to be able to trace the lifecycle of those data sources from the origin (e.g. vendor supplied or internal) to what systems consume it (and even manipulate it) all the way to the front-office consumers. We look at this globally, and detail the true quality, value and speed it is provided. We look at the road it took to get there and where any redundancies exist. Many times, clients have multiple licenses for the same data without even knowing it. That’s a conversation to have with the data provider and your firm to determine better efficiencies. In addition, a lot of times we’ll find overly complex processes where the data from the vendor is manipulated and in some cases polluted downstream to other consumers (unknown to them). A challenge we see with our clients is this data traceability and transparency. What other groups are using this data? Are they manually extracting the data, putting it into excel and doing further manipulations? What “other” extra work/steps are being done, and why. Understanding this web of data in your organization, it’s quality and value, and simplifying it for your organization in a cost effective way, is the greatest challenge we see.
QAs we all know, IBOR is a topic that has been spoken about for years, yet there is still relatively low uptake from the buy-side. Why do you think this is? What needs to change?
An IBOR implementation is certainly a commitment. A few years ago I had the privilege of working on an IBOR project before the term was even coined. When you have multiple accounting systems, trade order management systems, and data sources, it can get quite overwhelming. Layer in the interfaces you’ll need to communicate for real time trade transactions, and it can only get more complex. I believe a lot of buy-side firms may be waiting on the sidelines to see what else can I get with this investment? Can I run my trading systems on the IBOR platform? If you look at some of the vendors offering Software As a Service and/or investment systems hosting, you’ll also notice they market it as having IBOR characteristics. In terms of what needs to change, that depends. As global firms try to centralize on to 1 trading system, then implementing an IBOR theoretically should become far less complex as the “heavy lifting” of data consolidation has been done. Firms with multiple disparate systems however, may have a more difficult time implementing an IBOR.
QFor an organization considering implementing an IBOR, what would you say are the true benefits that will be realized for them?
The best analogy I have made when speaking on this topic, is to ask any pilot of any technologically advanced aircraft who has a “glass cockpit”. If you look at the amount of information and data available on the dashboard in their cockpit, it gives them everything they need to know to make decisions in flight (like weather, terrain alerts, and system failures). It also helps tremendously with their situation awareness so they can react to changing flight conditions in real-time. An IBOR solution is really no different than that analogy in that it can consolidate and aggregate in real-time, all the indicators an investment manager needs to mitigate and control risks, and ensure a successful outcome of their investments.