About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

M&A and JVs Good Idea in Principle, More Difficult in Data Practice

Subscribe to our newsletter

The news this week that Morgan Stanley and Citi’s joint venture in the wealth management space, dubbed Morgan Stanley Smith Barney, will be delayed by up to two years as a result of IT integration issues, will not be news to the data management community. After all, this sector of the industry has been suffering from integration issues, a lack of investment and severely siloed back office systems for years. However, given the increased level of M&A over the last couple of years, the question of how long this slow pace of progress can be sustained is becoming ever more urgent.

As indicated by Citi’s global head of customer accounts operations, Julia Suttton, at last year’s FIMA conference in London, the bank itself has enough to contend with regarding data integration within its own institution, let alone combining that with Morgan Stanley’s systems. The delay to the joint venture, which was signed and sealed on 1 June, is just one example of how important standardisation of data formats and processes is to the future of the banking industry.

Morgan Stanley has effectively paid US$2.75 billion for a stake in a business that will potentially be hampered by data and system integration issues for the next two years. Accordingly, Morgan Stanley’s financial advisers will not be able to access products from Citi’s capital markets business, and vice-versa, for some time to come. This isn’t particularly shocking news in itself, but what is a positive step forward is the publicity surrounding this delay and its potential to push data integration issues back up the priority list.

Regulatory requirements aimed at improving financial institutions’ risk management strategies are also likely to impact recently merged institutions more severely than other firms. Gathering together data across disparate systems for new daily reporting requirements with regards to the UK Financial Services Authority’s soon to be introduced liquidity regime will not be an easy task. And, given the regulatory community’s recent sharpening of its teeth in the form of direct board responsibility for actions and higher levels for fines, this too may help the data management cause.

Citi seems to have taken notice and is, at the very least, paying lip service to the issue of integrating its systems and data. Last month, Vikram Pandit, Citi’s CEO, championed the ideals of integration and stated his intention to save the firm US$1 billion in technology costs via a rationalisation of its systems. Given the patchwork of systems that make up the Wall Street giant, he’ll certainly have his work cut out for him. Let’s hope that other firms take note and get on the case too.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: How to automate entity data management and due diligence to ensure efficiency, accuracy and compliance

Requesting, gathering, analysing and monitoring customer, vendor and partner entity data is time consuming, and often a tedious manual process. This can slow down customer relationships and expose financial institutions to risk from inaccurate, incomplete or outdated data – but there are solutions to these problems. This webinar will consider the challenges of sourcing and...

BLOG

Pzena Up and Running with Portfolio Optimisation on Rimes Matrix Platform

Pzena Investment Management, an investment manager based in New York City with a focus on long-term classic value investing, is in production on Rimes’ Matrix investment management platform with the aim of supporting efforts to streamline operations, mitigate risk, and enhance portfolio optimisation capabilities. Rimes engaged with Pzena in February 2023 and the solution went...

EVENT

RegTech Summit London

Now in its 8th year, the RegTech Summit in London will bring together the RegTech ecosystem to explore how the European capital markets financial industry can leverage technology to drive innovation, cut costs and support regulatory change.

GUIDE

RegTech Suppliers Guide 2020/2021

Welcome to the second edition of A-Team Group’s RegTech Suppliers Guide, an essential aid for financial institutions sourcing innovative solutions to improve their regulatory response, and a showcase for encumbent and new RegTech vendors with offerings designed to match market demand. Available free of charge and based on an industry-wide survey, the guide provides a...