How is Data Governance Changing the Face of Asset Management?

FactSet’s Dean McIntyre, Director of Strategy for Front Office Solutions, recently spoke with FStech to discuss the issues surrounding data governance in financial services. During the conversation, he also explores how asset managers can empower staff from front to back office, reduce operating costs, and ease compliance with the right systems and processes.

Q: How do you currently see the state of data governance across the parts of financial services that you cover? And how have things changed since the start of the pandemic about 10 months ago or so?

For me, the first thing to reiterate is that data has always been a challenge—it's never gone away. Now we are moving into a phase where we have more and more data governance—that is becoming the key element of the data change. The balance of governance and empowerment then takes us to the next phase. We're going to talk about things like digital transformation, but without the right governed data and control of that data, we can't get that empowerment right. And that is prevalent right now with the pandemic, with everyone working from home and using online systems to consume more and more.

Q: With companies like Amazon using AI to create a great user experience and the growing influence of the digital generation in the investment world, does this spell the end of the Excel spreadsheet? Is it time to consign it to the dustbin of history?

Excel is the most common UDP (user-defined process) in the market, so I don't think that's going away. What is going away are the regulatory reasons for using Excel. The idea of holding an Excel spreadsheet with proprietary data is really quite a scary prospect, so companies are looking for more robust processes and far more transparency.

Q: There’s a rising generation within asset management, their expectations are changing, their lifestyles are much more digital. Are they expecting their workplaces to reflect that?

The asset management world is far behind the curve when it comes to technological changes. Things like APIs and microservices are becoming more prevalent in the industry right now. But Amazon coined that in 2006—that was when they changed to API, which is new tech in the investment world right now. Things are catching up, things are changing, expectations are higher, new graduates coming into companies are affecting the way we interact.

Q: Can you talk me through the process of digital transformation, particularly for asset managers and how effective it can be?

If you look back five years ago, the huge investment in data lakes, data warehouses, investment in understanding your data, and starting to control your data had to be the first building block. The first parameter of opening your doors is making sure what’s behind the doors is comfortable.

I think it has been a long journey, but now digital transformation and the tools to consume that data is far more obvious, there are business intelligence tools coming out that are far more prevalent in the investment world now. Moving from monolithic to microservice architecture has really been a goal of a lot of our companies.

Q: From a consumer point of view you want to make sure your data is being handled safely and securely, so there is that tension there. Is it easier to manage if you have good visibility with compliance and those kinds of policies inbuilt?

Understanding what the cloud really means when you're looking at technology and sharing technology is really important to understanding where your goal is. And I think when it comes to technology, I always look back to the architecture and how your company wants to be in the future—it's that lifestyle change.

Q: Is there buy-in for this kind of data-driven transformation from senior leaders? What are their priorities at the moment?

There's a huge buy-in; the focus on data has been an obvious trend toward that digitalization. But I think, the bigger projects around what C-level are trying to do, we are seeing in the vendor space that our clients are looking to do more with less. They want more partnerships with clients, with vendors, and they want fewer vendors. That's not saying I want to use one vendor, but I want to use the right vendors that will partner and do more of my business.

Q: On the regulatory side of things, having data governance is just as important as the quality of the data. Why is it important that companies are able to improve this framework?

I think from a regulatory point of view it’s all about providing transparency and showing how you are controlling that data, identifying what data is going in. All the way through the organization from regulatory, that transparency is key, and that's why a coupling governance with transparency or distribution is really important.

Q: Beyond the basics, good data management should be able to aid and support innovation too. We've seen a rise in deep data; how are firms thinking about advanced analytics, AI, and machine learning, and how are they trying to use those to gain advantage to keep up with more agile challenges in the market?

It’s about identifying how we take that deep data that people have gathered and created over time, like microservice architecture, so that we can open up more robust programming into our data. It’s important to identify how a company can become more open to allowing people to challenge its data in new ways using AI and ML.

Q: How can you assess your performance as a fund manager? What makes a good fund manager?

The biggest challenge of the fund manager is data. We’re constantly challenged with data from analysts, news feeds, and it’s about identifying how to help a fund manager understand that data in a way that is consumable. Machine learning and artificial intelligence could be the answer.

To hear the full conversation, listen to the FStech podcast.