CLOUD ADOPTION REACHED TIPPING POINT IN DATA.
The fund management industry is embracing the cloud with 80% of European and North American asset managers with $10-100bn AUM to use the technology for data management by end of 2020, according to a study by IHS Markit.
The research, paints a positive picture of an industry segment becoming more strategic and sophisticated in its approach to data management. The findings also show, however, that this part of the market is not immune to the pressures of mounting fees, rising costs and demanding regulations. Firms are looking to bolster margins by using the cloud to focus on value-add activities and invest in data warehousing technology to support growing reporting requirements.
The results revealed that 52% of investment firms currently use cloud for data management while an additional 28% have plans to migrate data management to the cloud over the next 18 months. Almost half confirmed they have outlined plans to establish a data warehouse within two years, as the buyside continue to manage regulatory reporting requirements.
“The survey results demonstrate that we have reached a tipping point for cloud adoption among the buy side as it fast becomes the default deployment option for firms with $10-100bn AUM,” said Andrew Eisen, global head of EDM and thinkFolio at IHS Markit. “Firms cite the ability to offload administrative burdens (42%) as the biggest benefit of moving to the cloud. It is therefore no surprise to find that respondents see the most value in moving application management to the cloud. This finding also reflects how thinking around the cloud has evolved beyond infrastructure.”
There are gaps though especially in the way firms aggregate, store and structure data to support reporting, with 39% responding that they use multiple marts and spreadsheets. However, a change is underway, as 34% plan to implement a data warehouse in the next 18-24 months. This will bring the total with a data warehouse to 46% in two years reflecting the need for this technology to manage a wealth of new reporting requirements.
Firms now need to tackle the challenge of data transparency, so they can be confident in the accuracy of the data they are using daily for decision-making, reporting, client communication and regulatory compliance.
Eisen said, “As firms adopt more complex operating models in response to these issues, many realise it is unsustainable to rely on disparate systems and spreadsheets for data management; these types of set-ups will never provide a comprehensive, trusted view of a firm’s operations and performance. As a result, buy-side institutions are investing in the latest data management technology to deliver timely, trusted, accurate and consistent data.”
©Best Execution 2019