Senior executives at financial institutions expect to direct the biggest boost in their data expenditure plans over the coming year towards ESG information, according to a survey that also found that high-quality data and analytics in all domains is being prioritised for growth.
In its third annual Future of Finance survey, Switzerland-based exchange operator SIX also found that institutions’ data focusses have changed markedly as the they anticipate an uptick in the global economy. As well, their attitudes to artificial intelligence (AI) have altered as more use cases for the technology have emerged.
The report, which bills itself as a barometer of industry sentiment, highlights the shifting data priorities of financial institutions as market volatility, new geopolitical forces and technological transformation reshapes the way they do business. The need for good quality data emerged as the primary factor that will drive growth during these uncertain times, with institutions looking to diversify their exposures, particularly to alternative markets.
“The diverse ways financial institutions are implementing … technology demonstrate how evolution is at the heart of finance,” SIX chief executive Jos Dijsselhof wrote. “The integration of these technologies within the traditional financial system provides the degree of choice that enables progress. Caution around emerging technology appears to be giving way to excitement about its potential.”
Top of the List
The survey of C-suite executives at 293 institutions in Germany, Hong Kong, Singapore, Spain, Switzerland, the UK and the US found that ESG has climbed up their list of data priorities. Two-fifths of investment banks said they expected it would be the data domain that would receive the greatest resource increase in 2025, followed by regulatory and compliance data. Reference data came in third.
The responses differed across geographies, however. ESG was most important to institutions everywhere except the US, where reference data is expected to get the biggest bump in funding, and in the UK where executives are split between investing more in regulatory data and historical data.
ESG data remains the most difficult to manage, however. Collecting the information needed from multiple sources for internal and reporting use cases was the most cited challenge followed closely by establishing the infrastructure necessary to analyse data and metrics.
Long-standing frustration over a lack of data standardisation endures, the survey found also.
Optimistic Signs
Nevertheless, SIX head of financial information Marion Leslie said the situation was improving for financial institutions – a view borne out by survey findings that a fifth of respondents said that the availability of higher quality data had driven growth in ESG investments.
“Data has always played a critical role for financial institutions, and this is proving to be the case when it comes to ESG,” Leslie wrote. “Improvements in ESG data and the developments in ESG regulation have enabled greater transparency, increased market confidence, and – as a consequence – investment growth.”
Regulatory reporting remains a headache for a fifth of asset managers, which the survey authors attributed to the growth of ESG- and sustainability-linked regulations introduced in the European Union and the UK in the past year. Meanwhile, just 11 per cent of respondents now see the risk-return considerations of ESG investing as important.
Less AI
AI slipped down the rankings of perceived key drivers of growth among asset managers, being overtaken by data provisioning through APIs, data analytics and cloud-based technologies.
AI’s expected role within enterprises has also changed. No longer is it seen as a tool to help generate value. In SIX’s latest survey, executives saw its most useful application in automating regulatory compliance and reporting. And respondents identified benefits in its deployment within middle- and back-office functions.
In terms of technology adoption, the importance of one application received almost unanimous consensus. Distributed ledger technology (DLT), or blockchains, were cited by 99 per cent of respondents as a technology they anticipate using in the coming year as they commit more capital towards digital assets.
Dijsselhof said the changes in sentiment seen in the company’s latest report were not unexpected.
Executives “will always identify a multitude of growth drivers, differing technologies they are prioritising and distinct data types they expect to invest in more heavily”, Dijsselhof wrote. “One thing remains constant, though – their recognition that by embracing innovation, their organisations are better placed to succeed.”
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