Global custodian State Street has released the first in a series of white papers examining the impact of technology on financial services, which (among other things) highlights the evolution of the IT and data management functions. Referring to the “true value of data”, the paper highlights the importance that data management and IT has taken on with regards to the business and the move from data “warehousing” to supporting “dynamically interconnected information”.
Speaking about the white paper’s findings, Christopher Perretta, executive vice president and chief information officer for State Street, says: “Investors have always demanded more information, faster information, greater transparency and improved risk management. They will soon get their wish as forthcoming technology will enable them to slice, dice, process, manage and correlate data in ways that will give them exponentially greater value and security, enabling them to make better and more informed investment decisions than ever before.”
The State Street paper indicates that IT is no longer merely a “support” function but it is now a business function that is focused on “managing data as a genuine asset”. It states: “Going forward, data will not simply represent inventory to passively store or warehouse, but rather dynamically interconnected information to correlate, integrate and use holistically. Indeed, the warehouse becomes the nerve center that adds value to stored legacy information, turning it into an actionable commodity. In fact, at every step, information will acquire value just like any asset in a portfolio. A primary purpose of technology will become implementing strategies for enriching data to achieve larger business objectives across all functions.”
The paper contends that such strategies will allow for enhanced reporting and analytical capabilities, including, for example, the use of data to test risk and investment assumptions, and to explore predictive scenarios built around various decision paths. This idea of data management becoming a much more integral part of business functions and risk management is something Reference Data Review readers will be familiar with. Data managers are getting a seat at the table alongside the risk management and compliance functions, as noted by Julia Sutton, global head of customer data and onboarding at Royal Bank of Canada (RBC), last year.
State Street reckons data management in the future will comprise “only one element in an integrated series of operations that begins with transactional processing and includes work ?ow technology (to enable business automation), exceptions monitoring, data management and end use, data rich dashboards.” These dashboards and data tools will be capable of dealing with multiple asset classes and be “seamlessly integrated into all functions and work processes, managing the data behind it and the business processes that support the data.” They will also be determined by internal and external user requirements, says the paper.
This focus on the functionality required by the end user community is certainly something that has become more evident within the data management community over recent years. Bank Of America, for example, has recalibrated the goal of its reference data project so that it is no longer focused on merely establishing a single gold copy, rather it is on building a robust data fabric to support all of its downstream users’ requirements. The increased focus on meeting downstream users’ requirements, whether internal or external, is paramount in the reference data industry at the moment and this has affected the approach to data management projects significantly.
The State Street report adds: “An effective data management system will draw upon the reference architecture’s fundamental principles to acquire, validate, secure, enrich and distribute data in a hub and spoke con?guration.” To this end, it talks up the benefits of data dashboards and cloud computing (private rather than public cloud) as key tools via which to conduct these processes. It concludes: “they both share the goal of making vast amounts of information available in real time, as the result of a dramatic expansion in computing power.”
The full white paper is available to download from the State Street website here.
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