Creepy or cool: unlocking the value of data

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by Greg Bright*

RBC Investor & Treasury Services posed an interesting question to fund managers last week: “Is data creepy or cool?” The answer, probably, is: “both”. An eclectic group of fund managers gathered in Sydney and had their say on data, its collection and its management.

And, an interesting further question is: ‘who owns the data?’ We are entering new ground here. There are no rules. And, by the way, fund managers should step up, because asset servicing companies are. That was the sub-text at RBC’s fund manager roundtable in Sydney last Friday, where 21 people gathered to discuss the implications, the nuts and bolts, of the new world of data gathering and usage. One thing is clear: it will transform the funds management industry.

Jamie Stevenson, RBC’s investor and treasury services division global product head for data and analytics, based in London, said last week that there were lots of new technologies being employed to enhance the use of data by fund managers.

“What we need to do, what we are helping our clients do, is define data in a way that it’s relevant,” he said. “We also have to be aware of the changes that follow in an organisation when you go down the smart data path.”

Stevenson said: “At the end of the day all this has to have a purpose. We need to ask ourselves: ‘what will this do to our business?’ What managers are doing is helping build the assets across the entire lifetime of their own clients.”

For its own business, for the only asset servicing provider in Australia which specialises in funds management firms, it has introduced what it calls “agile working practices”.

David Travers, RBC Investor & Treasury Services head for Australia, said that most people in the industry were aware of the potential and ramifications from artificial intelligence (AI) and robotics. A recent report by Optus suggested that the “fourth industrial revolution” would be all about data,

According to its own survey of asset manager expectations, RBC polled 33 funds management representatives in Australia and reported that 97 per cent of respondents were confident in their ability to adapt to the changing business environment. Whether that confidence is well placed, only time will tell.

The survey, “Managing Change in a Dynamic Market, also showed that fund managers thought that data enabled them to both make better investment decisions and also better understand their clients’ needs. More than 60 per cent of firms intended to introduce new products in the coming year, with liquid alternatives being the top priority for those with launch plans.

Stevenson says that: “I am increasingly spending time with clients who say they need a data strategy,” he says. “We’ve had plenty of hype around big data but asset managers are now asking how they can best use it.” He refers to three principal areas of discussion:

  • Using APIs (application programming interfaces) in uploading and transferring files to enhance the client experience and reduce complexity.
  • Clients are asking for access to the tools, talent and technology offered by securities services providers.
  • Insight – “The nature of what we are providing is changing. We don’t just deliver the files we are asked for. We look to get under the skin of the original underlying problem that clients are trying to solve. We see similar problems recurring across our client base and this helps us recommend solutions more effectively.”

Asset servicing firms have access to a lot of data, through their clients, which they are able to analyse and pass on in aggregate form, or back to the individual clients as the case may be. The ownership of data generally, however, is becoming a bit murky.

Thanks to social media sites, such as Facebook, and the direct marketing innovations of companies such as Amazon, we all know that our own personal information and reading behaviours are not so personal anymore. RBC is careful to ensure the information it analyses stays with the client firm which enabled its provision.

Denis Carroll, the Australian representative and managing director of European risk management firm Check Risk, said that there was a certain “inevitability” about the increasing use of data. “If you don’t get on board, there will be serious consequences,” he said. “A lot of super funds are not really investing in it as yet.” He believes that the more data you collect should produce better outcomes for your members or customers. One big manager represented at the roundtable has set up a “data office”, a part of which’s job is to examine who actually owns the data in its possession.

Stevenson said: “We need to look at the ethics surrounding data usage. That’s why we ask is it ‘creepy or cool?’. There’s a lot of personal data that everyone comes across.”

A conversation about data tended to move into a conversation about a firm’s business, he said. How you combine technology, data and other information tends to also change the engagement model. “We are actually really talking about the foundations of a firm,” he said.

For funds managers, if you are concerned about how AI might affect your job, a North American organisation is running a trial using AI to trade directly. David Travers said that the numbers to date show the AI-run results are outperforming. That sounds pretty cool.

*The asset management roundtable was organised by Patrick Liddy of MSI Group, John Hamer of the Hamer Connection and the author, on behalf of RBC Investor & Treasury Services.

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