Preview: Buyside & Sellside Data Management Solutions 2024
The 2024 digital data management industrial revolution
In 2024, the concept of ‘data as an asset’ is well understood by financial services organisations of all kinds, offering competitive advantages that make it imperative to work with information that is complete, curated, readily available and monetisable. Typically, data must be stored regardless of its pre-defined use; therefore, all systems that generate data points must follow a Big Data ‘store and forget’ protocol irrespective of the emphasis that is put on the analysis of the information. Hence, organisations such as CIBs that typically hold petabytes of data turned to cloud environments, where scalability rapidly trumped the costs associated with on-premises setups.
As the CIB industry continues to move its data storage approaches into Cloud environments, cost management is a primary concern; namely, an institution’s ability to weather the potentially spiralling expenses associated with subscriptions to a multitude of cloud providers by transforming client services profiles of the front-, middle- and back-office business and trading models utilising those environments. For example, this can mean that front-office franchises work to become more adept at providing buyside client counterparties with competitive differentiation on a cost-per-ticket basis or through add-ons to an existing client services package that greatly enhances its historical value. Data gathering associated with client interests, a general smoothing of on-going know-your-client processing and, from an overall perspective, general client lifecycle management by means of greater use of automation toolkits are all examples of methods through which existing client services packages are typically enhanced by CIB front-office franchises in 2024, according to GreySpark observations.
The technological upside to those two approaches to competitive differentiation by means of cloud utilisation for CIBs is that – to deliver the benefits – the institutions must be as fully integrated into their clients’ corresponding front-, middle- and back-office investment or trade management systems as possible. GreySpark frequently observes that the CIBs that succeed in doing so well do so by adapting their own data management systems – and the cloud environments they are connected to – such that they fit as seamlessly as possible with their clients’ existing workflows. A supply chain approach is typically adopted to drive this technological integration effort, and it typically entails a CIB writing and then offering the necessary application programming interfaces needed to integrate from the institution’s side into the ecosystem of platforms, market utilities and vendors on the client’s end.
Currently, the largest Tier I CIBs maintain an outsized advantage over their smaller competitors in the race to automate and develop data management functions and services because of the switch to agency-centric front-office business and trading models that those institutions began to implement soon after the onset of the 2008 financial crisis. For those CIBs that held on to principal trading models post 2008, and are still making the transition to agency trading, retrenchment is very much the order of the day, with automation transformation of business models, in a data sense, providing longer term economies of scale.
As such, most of the global CIB industry is at the beginning in 2024 of a data management digital industrial revolution built on three pillars:
1. Data Manufacturing – The electronification of the trade lifecycle across all capital markets asset classes and the automation of all front-to-back processes, allowing straight-through processing across an institution’s value chain;
2. Data Distribution – A focus on the development of a consistent user experience for all interactions between the institution and its clients across all available channels; and
3. Data Control & Optimisation – Turning the enormous amount of information an institution holds into knowledge and, in turn, into ‘insights.’
The scale of the effort required to undertake these transformations typically exceeds the capabilities of all but the largest Tier I CIB institutions, based on GreySpark observations.
As a result, CIBs must broadly use the in-house built and data management vendor-provided technology solutions available to them to overcome the immense hurdles associated with the normalisation and reconciliation of the universe of data points generated by their own activities as well as those of their clients. Doing so remains challenging, however, due to the persistence of:
siloed sources of data per business unit, department or trading desk;
multiple and duplicate systems used to manage the information;
a lack of common, industry standards for data semantics;
continual debates surrounding data access and storage concerns; and
manual, error-prone and slow processes associated with funnelling data into channels or pipes where it can be analysed for insights and, thus, transformed.
Simply put, overcoming these challenges means that institutions or firms must utilise data management technology toolkits specialised in concept of the treatment of data as an asset. Such toolkits are identifiable by their ability to satisfy four expertise domains that are commonly demanded by business users:
1. Data Treatment via Contextualisation & Care – The development of an enterprise metadata repository in which contextual information about business data provides consistency and optimisation for all data management activities that, in turn, supports the assembly of golden sources where all data related to a specific concept, application or reference can be used to feed down-stream processes;
2. Data Accessibility – Clear policies for data distribution, access and API provision;
3. Data Normalisation / Standardisation – Utilising canonical data formats to structure data into formats that are known by all systems that supply or consume the information; and
4. Data Analytics & Visualisation – Investments in application toolkits that complement business information or management information systems in the creation of reports on in a real-time or near-real time basis that business managers can then act on in confidence.
For more information, take a look at our latest buyer’s guide, Buyside & Sellside Data Management Solutions 2024, here.
For further information, please do not hesitate to contact us at london@greyspark.com with any questions or comments you may have. We are always happy to elaborate on the wider implications of these headlines from our unique capital markets consultative perspective.