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

Subscribe to our newsletter

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.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Strategies, technologies and services for successful corporate actions automation

Rising volumes and increasing complexity of corporate actions are challenging market participants’ efforts to reconcile data, automate corporate actions processing, and contain costs. The culprits causing these challenges include legacy systems, missing skills, manual processes, data quality issues, and a lack of standardisation. Added to these is the increasing complexity of corporate actions such as...

BLOG

Regulatory Oversight Committee of the LEI Revises Policy on Level 2 Data Reporting

The Regulatory Oversight Committee (ROC) of the Global LEI System (GLEIS) has revised two elements of policy covering the reporting of LEI parent relationship data, also known as Level 2 data. To improve the usability of Level 2 data, the ROC has revised the list of opt-out reasons that can be used by an entity...

EVENT

Data Management Summit Boston (Redirected)

As investment management firms take on more responsibility and control over core operational functions, A-Team has seen demand for a more buy-side oriented event focused on data and data management. The inaugural DMS Boston will take place in June 2020, and will focus on topics of interest to buy-side practitioners.

GUIDE

ESG Handbook 2021

A-Team Group’s ESG Handbook 2021 is a ‘must read’ for all capital markets participants, data vendors and solutions providers involved in Environmental, Social and Governance (ESG) investing and product development. It includes extensive coverage of all elements of ESG, from an initial definition and why ESG is important, to existing and emerging regulations, data challenges...