The importance of data and analytics for investment management

Access to high-quality data is a critical component of any successful investment portfolio. But more than just having access to the data, making better decisions is also about knowing how to analyse that data and using that analysis to guide your decision-making processes. In this blog post, we will explore why investment management organisations should use data management and analytics tools, and the challenges to be considered when adopting these tools.

Volatility, growth and regulatory scrutiny 

Investment management is undergoing massive growth and, with that, comes new challenges, of increasing business complexity and regulatory scrutiny. These challenges are compounded by broader issues within today’s global economic environment, including inflation and market volatility. Data and decision-making need to be more closely aligned in real-time. 

 Investment managers are responsible for an array of sensitive customer data, from different sources requiring to be reconciled. This needs to be combined with data that pertains to what is going on in the macro world and how it affects portfolios and markets. In addition, there are growing regulatory reporting and compliance matters that necessitate many bespoke reports. Technology needs to be the enabler to simplify this growing complexity. 

With appropriate analytics and data management, companies can harness the knowledge that comes from all this data to get fast and pertinent insights to guide their investments whilst being able to provide accurate and timely regulatory reporting. Good quality, clean data is a must-have.  Data and analytics tools lead to faster and better decision-making and play an outsized role in risk mitigation and compliance. For investment management firms, staying ahead means focusing on digital transformation of their data management and, turning to data and analytics to empower their decisions. 

The challenges ahead — and how to thrive despite them 

In research published last year, Deloitte pointed to “market challenges, changing client expectations, and evolving technologies” as “huge factors” impacting investment companies in 2023 and beyond. 

According to Deloitte’s 2023 Investment Management Outlook, “digital transformation holds the key to differentiated results”. “The connection between progress on the digital transformation journey and improving culture is remarkably strong,” the company said. However, Deloitte also pointed out that “governance and reporting mechanisms at many investment management firms have still not caught up with the pace of digital transformation”. 

Encouragingly, PwC Research found that investment management businesses are forging ahead with digital transformation despite current market challenges, as a way of thriving, not just surviving.  According to PwC’s Next in asset and wealth management 2023, “asset and wealth managers have been accelerating their investment in digital transformation spurred by the popularity of remote work, by shifting investor preferences toward digital engagement and by the opportunity to drive efficiency and growth.”

However, their research shows that “too often, firms embark on these efforts in silos, without clear alignment between business-owned use cases and tech-owned infrastructure and a less than optimal balance between long-term transformational goals and near-term impact to sustain the momentum”. 

Looking ahead, PwC Research recommends that investment firms “replace any antiquated (less effective) systems for cloud-based technology and build a business-driven data and analytics strategy and supporting capabilities. Firms also should decide on the strategies they want to execute now and what they can implement down the road to avoid making the mistake of tackling too many things all at once”.

Digital transformation is key to facing external factors 

Growth, regulatory requirements and market volatility are all putting pressure on investment management performance across the globe. Digital transformation in Data and Analytics capability will empower better business decisions to stay ahead and gain better investment outcomes for customers.  The time to replace antiquated data systems and processes is now. 

AlphaCert is committed to driving better investment outcomes for fund managers.  We help investment management funds use data management technology and analytics to improve their business and financial outcomes.  We also enable them to deal with increasing regulatory and data security needs through a highly secure industry-proven SaaS platform.  

Contact us today to find out how AlphaCert’s tools and professional services can help get your organisation get value out of your data and ensure your customers thrive.