The Innovator’s Journey:Pathways to Data DexterityState Street 2014 Data and Analytics Survey
Asset Owners Insights
March 2015
2 2 55
5
7
9
1112
20
22
Hong Kong
Germany
South Africa
Singapore
Brazil
Australia
France
United Kingdom
Canada
China
United States of America
Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
State Street 2014 Data and Analytics Survey
2
About the Research
Asset Owners by Country (%)
On behalf of State Street, Longitude conducted a global survey of senior executives at investment organizations during October and November 2014. We asked them to self-assess their confidence and progress across six data capabilities, including infrastructure, insight, adaptability, compliance, talent and governance. The 400 respondents were drawn from 11 countries and included insurance companies, private and public pension funds, fund-of-funds, foundations, central banks, endowments, sovereign wealth funds and supranationals. One hundred asset owners participated in the survey.
CORP-1335
Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Our Analysis Identifies Three Groups of Asset Owners at Different Stages in the Data Journey
3
Data Starters Companies at an
early stage in their data journey
Data Movers
Companies actively moving toward better
data capabilities
Data Innovators
Companies with advanced data infrastructure,
expertise and high-quality data governance
40%
38%
22%
CORP-1335
Data Starters
Data Movers
Data Innovators
Infrastructure• Incompatible
legacy systems
• Most data in separate silos
• Separate platforms for different asset classes
• Aggregation, visualization, other data management capabilities upgraded
• Improved data integration across investment portfolio
• Infrastructure & tools fully upgraded
• Silos broken down
• Seamless integration of unstructured data
Insight Generation• Limited ability to
generate performance and risk analysis
• Fragmented view by asset class
• Ability to conduct scenario & stress testing across portfolios
• Integrated view of risk & performance across multi-asset portfolios
Adaptability• Capabilities take
much time & effort to adapt to any changes in investment strategy
• Capabilities can adapt quickly to support new products or investment strategies
Compliance• Systems struggle
to keep up with existing regulatory requirements
Skills• Data team can
manage data collection and basic analytics functions
Governance• Basic data
policies and processes in place, but governance is patchy; little standardization
• Data gaps, errors identified; cleaning under way
• Coherent, agreed framework for data governance
• Reduction in time to market for new product additions, or new asset classes
• Systems fully compliant with existing requirements, but slow to adapt to new rules
• Team can manage data collection & integration; some capabilities to perform & manage analytics
• Rich, partly integrated performance & risk analysis in individual asset classes
• Ability to analyzeperformance & risk of wide range of alternative assets
• Excellent data quality and traceability back to source
• Reporting systems adapt quickly to new requirements across global footprint
• Regular flow of insights; smooth interaction with fund managers
• Team has fully optimized data management; advanced Insight generation
• Large degree of standardization across internal databases; external providers aligned
• Strong leadership on data governance; policies & processes entrenched throughout
Note: Above sequencing is illustrative only; milestones may be reached simultaneously or in other sequences.
Our Survey Benchmarked Companies on Six Paths to Innovation
4
CORP-1335
Why Data Innovators Are Pulling Ahead of the Competition
5
The Innovator’s Advantage
1. Robust, tightly integrated data infrastructure
2. Ability to join dots on data yields new insights
3. Adaptive architectures meet new business needs faster
4. Global solutions that are ready for regulatory change
5. World-class data and analytical talent
6. A sophisticated approach to data governance
Key Characteristics Marking Innovators Apart
• Innovators see data and analytics as the single most important strategic priority
• They invest more in technology — and translate this into a competitive advantage
• They can take regulatory compliance in their stride, so technology investments focus on value-adding activity
• They are exploring cutting-edge tools including big data and advanced analytics, and hiring data scientists to drive innovation
Why Starters Get Stuck, and Movers Have Further to Go
• Legacy systems prevent organizations from gaining an integrated view of investment data
• Weak data governance leaves these organizations vulnerable to problems with data integrity and security
• More than half these organizations fear their systems will not keep pace with new regulatory requirements
CORP-1335
32
55
45
18
23
59
27
24
16
24
13
11
29
16
5
3
10
5
5
5
0
Reducing investment costs across your asset portfolio
Evaluating risk and performance across the entire portfolio
Optimising our electronic trading strategies
Extracting investable insights from a large volume of data
Managing multiple internal and external data streams in varying formats
Generating forward-looking insights from our data
Conducting comprehensive, accurate scenario and stress testing on ourinvestment portfolio
Starters Movers Innovators
Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Data Dexterity Gives the Innovators Much Greater Confidence For the Future
6
Please Indicate the Level of Confidence You Have in Your Institution’s Current Data Capabilities in the Following Specific Areas. (% of asset owners with high confidence)
CORP-1335
Investing in Data
7 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Asset Owners are Investing More in Data and Analytics
8 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Which of the following statements best describes your organization’s investment in data and analytics capabilities in the past three years? (% of asset owners)
73%Of asset owners report growth of 5% or more in
the last three years
3
15
55
21
6
Investment has increased each yearby more than 20%
Investment has increased each yearby between 10% and 20%
Investment has increased each yearby between 5% and 10%
Investment has been flat, or increasedby less than 5%
Investment has remained flat ordeclined each year
CORP-1335
14
23
50
9
5
0
16
68
13
3
0
10
45
35
10
Investment has increased each year by more than20%
Investment has increased each year by between10% and 20%
Investment has increased each year by between5% and 10%
Investment has been flat, or increased by lessthan 5%
Investment has remained flat or declined eachyear
Starters Movers Innovators
… But Innovators Are Investing at a Faster Rate
9 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Which of the following statements best describes your organization’s investment in data and analytics capabilities in the past three years?(% of asset owners) 37%
of Innovators have increased investment in data
by over 10% each year
vs.
10%of Starters who raised
investment at the same rate
CORP-1335
Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Adaptable Systems Are the Priority – But Talent and Governance Is Also Key
10
In which of the following areas do you intend to prioritize investment in the next 3 years? (% of asset owners)
31
37
38
43
43
44
Analysis and visualisation of data
Data governance (e.g. clear policies, processesand leadership)
Data infrastructure
Ability of data systems to keep pace withregulatory requirements
Quality and availability of data talent
Adaptability of your data systems to new needs
CORP-1335
Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Innovators Will Outspend Their Peers Across a Broad Range of Technologies
11
Over the next 3 years, what changes do you expect to the level of investment your institution makes in the following types of technology or data? (% of asset owners)
32
18
27
23
55
45
41
32
29
29
26
29
39
34
21
18
33
18
18
13
13
13
20
8
Data management system
Accounting
Compliance/reporting
Portfolio modeling/ optimisation system
Electronic trading system
Performance analytics
Risk analytics
Order management / execution management systems (OMS/EMS)
Starters Movers Innovators
CORP-1335
Data Strategy and Challenges
12 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
3
29
44
24
It is a low-level strategic priority (near thebottom)
It is a mid-level strategic priority
It is a high strategic priority (near the top)
It is the most important strategic priority
Asset Owners Understand the Value of Data
13 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
How do most senior leaders at your institution view the importance of investment data and analytics relative to other major strategic priorities?(% of asset owners)
“Our investment in data and analytics capabilities
are a source of competitive advantage for us”
19%40%
Strongly agree
Somewhat agree
CORP-1335
Data and Analytics as Their Top Priority
But Innovators Are More Likely to View This Area as a Top Priority
14 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
How do most senior leaders at your institution view the importance of investment data and analytics relative to other major strategic priorities? (% of asset owners)
41%24%
Innovators
Movers
15% Starters
0
9
50
41
3
24
50
24
5
45
35
15
It is a low-level strategic priority (nearthe bottom)
It is a mid-level strategic priority
It is a high strategic priority (near thetop)
It is the most important strategic priority
Starters Movers Innovators
CORP-1335
Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Risk Standards and New Asset Classes Drive Change
15
Which of the following are most likely to require changes to the way your firm manages investment data over the next 3 years? (% of asset owners)
16
20
20
21
24
26
26
29
30
35
Growing volume of trading data
Increased demands from internal staff
Expansion into new regions
Increase in threats to cyber security
Electronification of trading
Competitive pressure
Increased demands from regulators
Increased demands from clients/investors
Expansion into new asset classes
More stringent risk management standards
CORP-1335
Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Half of Asset Owners Will Struggle to Cope With More Regulation
16
55%
Which of the following statements best characterizes your expectations for regulatory reporting requirements over the next 3 years? (% of asset owners)
3
15
49
33
Reporting requirements will ease
Reporting requirements will largely remainunchanged from today
Reporting requirements will increase, and our datacapabilities will struggle to cope
Reporting requirements will increase, but our datacapabilities will cope adequately
CORP-1335
Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
But Innovators Can Keep Pace With Regulation
17
Which of the following statements best characterizes your expectations for regulatory reporting requirements over the next 3 years? (% of asset owners)
0
9
18
73
3
11
55
32
5
23
60
13
Reporting requirements will ease
Reporting requirements will largely remain unchanged from today
Reporting requirements will increase, and our data capabilities willstruggle to cope
Reporting requirements will increase, but our data capabilities will copeadequately
Starters Movers Innovators
CORP-1335
Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
Data Security is Paramount – As Is Accuracy
18
• 80% believe data security is a key strategic issue for the investment industry
• Legacy systems, siloes and plethora of providers make improving data accuracy a difficult challenge
What do you consider to be the top challenges related to investment data and analytics overall for your business today? (% of asset owners)
19
2730
38
Ability to extractbroader themes and
forward-lookinginsights from data
Timeliness of dataAccuracy of dataSecurity of data
CORP-1335
Governance Will Need to be Strong in the Highly Complex Investment Data Environment
19 Source: State Street 2014 Data and Analytics Survey, conducted by Longitude Research
What are the toughest data integration challenges your company faces? (% of asset owners)
55%“” “The complexity of managing our data
distracts key employees from the areas where
they should be focusing most.”
19
20
22
25
25
27
30
31
38
Integrating legacy systems
Accessing external data
Cleaning data
Standardising data formats acrossdepartments
Integrating unstructured data
Working with data warehouses thatare too slow
Cost of external data
Working with data from externalproviders
Reconciling older data from multipledepartments
CORP-1335
How to Become a Data Innovator
Break the “legacy trap” by replacing outdated systems that lock your data in silos
Learn how to exploit unstructured data to drive new sources of insight
Integrate your analytics across the entire investment portfolio to spot new investment opportunities and to identify hidden risks
Embrace outsourced models and the cloud to become more flexible and cost efficient
Crack the compliance challenge with systems that can cope with global regulatory changes
Create compelling career opportunities for data scientists, and learn how to knit them into existing teams
Ensure data governance and security standards are understood by, and entrenched throughout, the organization
20
CORP-1335
21
CORP-1335
This document is for marketing and/or informational purposes only, it does not take into account any investor’s particular investment
objectives, strategies or tax and legal status, nor does it purport to be comprehensive or intended to replace the exercise of a client’s
own careful independent review regarding any corresponding investment decision or review of our products and services prior to making
any decision regarding their utilization. This does not constitute investment, legal, or tax advice and is not a solicitation for products or
services or intended to constitute any binding contractual arrangement or commitment by State Street and/or any subsidiary referenced
herein to provide securities services. State Street hereby disclaims all liability, whether arising in contract, tort or otherwise, for any
losses, liabilities, damages, expenses or costs arising, either direct or consequential, from or in connection with the use of this document
and/or the information herein. This document contains certain statements that may be deemed forward-looking statements, which are
based on certain assumptions and analyses made in light of experience and perception of historical trends, current conditions, expected
future developments and other factors believed appropriate in the circumstances.
All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or
warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not
be relied on as such. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to
third parties without State Street express written consent. Investing involves risk including the risk of loss of principal.
Expiration: March 31, 2016
©2015 State Street Corporation – All Rights Reserved
Top Related