The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

We Can’t Solve the Problems with the Same Thinking That Created Them; Radical Solution is Required to Solve Data Problems, says Avox’s Price

Radical thinking on industry business models is needed in such disastrous times, proselytised Avox’s Ken Price at FIMA this morning. He suggests turning the traditional ‘user in the middle sources multiple vendors’ model on its head so that the users, who after all generate most of the data themselves, become the centre of the model and work alongside vendors and other bodies such as tax authorities, registration authorities, and regulators and more. “There’s a huge amount of power in collaboration,” he said.

Highlighting the value that users already have, and that he suggests can be realised through working through vendors such as Avox, Price says that 70% of changes that are made to the Avox database are triggered by feedback from its clients. He acknowledges that many institutions remain uncomfortable with such an approach, but suggests it is a valid approach to addressing data problems.

“What we’re doing here is preventative maintenance. What is the cost of incorrect data if you do not do this?” he questioned. Citing a client example, the client could not correctly identify the risk level associated with any of its own clients resulting in the regulators insisting those clients were categorised as high risk. The implication was that the firm had to increase the capital withheld for potential losses associated with those clients, to the tune of £10 billion. By then addressing the data and risk classifications of its clients this capital was freed up, enabling the firm to invest elsewhere. “The £10 billion number was directly linked to data management by our client,” said Price.

Also, quoting from a recent study commissioned by Avox majority shareholder Deutsche Borse, the average risk event cost has been calculated to be $20 per event. In the banking sector there have been 90 such recorded events and 45 in the brokerage sector in the course of the year. At this level, the suggested budget that should be put aside to cover the losses stemming from these events is $4 million per year.

By addressing data management in a more radical way, and harnessing the power of the users’ own data through collaboration, the significant benefits of improved quality, reduced cost and increased flexibility can then be realised, said Price.

Related content

WEBINAR

Recorded Webinar: Data management for ESG requirements

Environmental, Social and Governance (ESG) investing is moving into the mainstream, requiring asset managers to develop ESG strategies that deliver for both the firm and its investors. While these strategies can outperform those that do not include ESG factors, there is no clear route to success in an immature market that is only just beginning...

BLOG

DSB Opens First Consultation on UPI Fee Principles

The Derivatives Service Bureau (DSB) opened a first round of industry consultation on fee principles for the Unique Product Identifier (UPI) today. The consultation ends on 5 March 2021 and is the first of two consultations before a final report is published in September 2021. The UPI will come into play in 2022 and will...

EVENT

Data Management Summit Virtual

The Data Management Summit Virtual will bring together the global data management community to share lessons learned, best practice guidance and latest innovations to emerge from the recent crisis. Join us online to hear from leading data practitioners and innovators from the UK, US and Europe who will share insights into how they are pushing the boundaries with data to deliver value with flexible but resilient data driven strategies.

GUIDE

A-Team Group’s Valuations Vendor Directory 2009

An indispensable guide to valuations professionals seeking providers of services in the asset valuations market. A-Team Group’s latest release in its series of directories – available for FREE download – focuses on vendors of valuations data, models and analytics. But this is not just another list of firms with their telephone numbers – you can get that...