Modernisation and simplification of data architectures has become a mantra for financial institutions as they seek to get the most out of their data – but it’s a goal that’s beset by many challenges.
Not least among them is change management; convincing the organisation’s chief financial officer and engineering teams that a transformation of its data estate is necessary may not be an easy sell.
That was one of the key observations at a panel discussion among leading names in the data management space at A-Team Group’s Data Management Summit New York City last week. In one of many illuminating sessions during the day-long event, delegates heard that while companies may not be resistant to change, they may be wary – or lack understanding – of the benefits of data transformation.Winning Buy-In
CJ Jaskoll, chief technology officer at Russell Investments, observed that one of the difficulties of winning buy-in for a data modernisation programme from a firm’s finance department is explaining the benefits it will bring to specific use cases. For instance, it will be less difficult to argue the case for implementing a data transformation if it helps drive a move into a new business arena or market. In that case, Jaskoll explained, IT teams won’t be fighting to convince business leaders of the need to invest in new technologies.
Often, he added, the finance teams are keen to modernise but don’t know how to achieve their goals. Consequently, they may attempt to solve these challenges in the wrong way. This, again, is where it’s vital that the business case is carefully explained so that the transformation can be put on a more suitable track.Even then, however, modernisation may still run up against the age-old question: will it be worth the money? This is where operational efficiency can come into its own, Jaskoll said; if the change process can bring down costs enough to justify the expense, then the business proposition will be more compelling.
Old Technology
Peter Ku, chief industry strategist for banking, capital markets and financial services at Informatica, echoed that point, adding that another thorn in the side of change must be considered: legacy infrastructure.
He summed up difficulties that existing setups can bring with the observation that financial services are exceptional at investing in new technology but slow at getting rid of old systems. The accumulation of infrastructure over past years may make it difficult to refactor and upgrade systems. And if those old setups had been developed with large investments in the past, a company’s business leaders may be reluctant to commit yet more resources to a project whose ROI may be unknown.
Nevertheless, the panel – moderated by Meradia head of data practice Brian Buzzelli – agreed that full modernisation, and not a simple retuning of existing tech, was critical at a time of rapid technological evolution.
From a practitioner’s point of view, Victor Dituro, global investment and risk data lead at JPMorgan Asset Management, told the panel that there is a wealth of evidence of benefits that proponents of change can communicate to justify transformation. Senior management will be won over when they see investment specialists can quadruple the number of clients they manage thanks to summarisation and data discovery tools, he said, and when a front-office operator can use artificial intelligence (AI) to solve a complex coding matter without troubling the IT department.
Legacy transformation may be messy and dirty, Dituro said, but it is essential because it satisfies the basic conceptual need to “shorten the time between the question and the answer”.
Finding the Right Solution
Selecting the right solution to achieve that transformation is another challenge with which the panel grappled. Buzzelli said that there is no-one- size-fits-all offering on the market and that several options are available, including through data marketplaces and data platforms.
However, Thomas McHugh, chief executive and co-founder of Finbourne Technology, said that there is often a disconnect between what firms expect from their data platform and what they get. The fundamental reason for this, he argued, is that builders of data products assume that financial services’ data needs are linear, when they aren’t.
Instead, he said, clients had approached him looking for holistic networks into which processes can be drawn and where there is no attempt to “re-implement accounting logic or evaluation logic”.
To avoid the disappointment that McHugh outlined, the integration of data platforms and data applications needs to be carefully examined, argued Mahesh Narayan, institutional asset management segment head at Arcesium. The two can’t exists in isolation, Narayan said, adding that data platforms had matured to the point where they can better help in the migration from legacy to a modern data architecture.
Business First
Buzzelli closed the discussion by touching on some of the general points of agreement. Among them was the imperative of having a data strategy to any modernisation programme, because that is how a firm will establish the ROI that will be critical to winning C-suite buy-in.
Also, he reiterated the notion that modernisation must fit the needs of the business and that the crucial focus must be to ensure that any new technology ensures that the enterprise continues making money, saving money and mitigating risks.
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