Investment Management Data Operations – Outsource, or Bring In-house?

It’s not a secret that data is a hugely powerful tool in the modern business world. But it’s one thing to know that, and quite another to harness its power. Many organisations and people talk broadly about creating their own destiny – but if they aren’t on top of their data, a core facet of their organisation is out of their control.

At the heart of Investment Management is the data existing within the framework and control of custodian banks. Custodians value assets every day, among other financial tasks, and provide some degree of reporting to the client organisations.

For organisations wanting to maximise the potential of their data, however, that leaves many issues and complexities unresolved. In a heavily regulated and increasingly competitive environment there is a great need for cost reduction, flexible reporting and means to meet regulatory compliance.

These issues and complexities all feed into a big decision:

  • Will an organisation see a benefit from bringing Investment Management data operations in-house?
  • Or is it better to keep data operations outsourced and rely on the capabilities of one or more custodians?

Before you can make up your mind either way, those potential issues need to be be considered. We’ve narrowed it down to the three Rs – not the reading, writing, arithmetic variety, but instead reporting, risk and regulation.

Ramping Up Reporting

While custodians play a vital role in the Investment Management process, clients must think about their own data management needs and what information is required for improved decision making.

Utilising a specialised Investment Management platform, like the AlphaCert platform, means that you can extract the data that will benefit your needs – and allow you the capability to enrich your data with relevant outside sources. This allows you both increased visibility and flexibility.

Risk Management – and Resource Optimisation

Many Investment Managers carry out in-house data management without adequate capabilities in this area. Manual, Excel-based processes are used – carrying a large amount of risk that flies under the radar. The manual handling of information in this way is often not acknowledged as data management – and this can lead to a number of problem, such as:

  • Critical business processes being managed manually, therefore carrying a high risk of human error. Manual management also creates a dependence on key individuals.
  • Highly valuable investment professionals spending more time doing data collation than actual data analysis.
  • A lack of visibility of the amount of work being carried out regularly on data management.
  • An inherent inability to scale – causing increased risk as the fund grows.  More full time employees are required to deal with the increased complexity, driving up costs.

This problem of scalability can be a major concern for growing organisations. As funds under management grow, reporting becomes a great deal more onerous – taking up time and bringing larger risk into the process as more people are needed to manipulate data.

AlphaCert removes this manual handling and manipulation of data, particularly from multiple sources. As talented as analysts may be, there is always the risk of human error when processes occur in their hands – and automation allows data to be processed very quickly and efficiently, without that risk. In doing so, it also frees up these specialists to get back to their analytical roots.

Regulatory Compliance

In our post-GFC landscape, there are greatly increased regulatory requirements that are constantly changing. Utilising a platform, such as AlphaCert, provides much greater flexibility to quickly meet these changing requirements.

In-house or Outsource?

There are arguments for managing Investment Management data in-house or outsourcing it – so there’s a need to consider what’s right in each situation. It may be achievable to maintain Excel-based data management processes where reporting needs are simple, but it is not scalable.

If the fund is larger, or preparing for growth, it’s important to take into consideration the biggest concerns around data management. This can include anything from scalability and flexibility, to best managing specific reporting and information needs.

For scale-focussed Investment Management, insourcing could be a better option. Solutions can be bought or built – depending on budget and available resources. Creating capability in-house can give flexibility and a competitive edge to be at the top of the field data-wise. With the right platform, Investment Managers can get scalability, flexibility, and reduction of risk.

Take the Next Step

If you think that you need an Investment Management platform to take your organisation to the next level, AlphaCert can provide the capabilities you need. Our expert team can also tailor solutions to fit your requirements. If you’re looking for a partner who understands the Investment Management industry and can help you leverage the latest technology – get in touch. 

AlphaCert will be represented at the FST Future of Superannuation event in Sydney on the 26th of May, so if you’re going to be attending, we hope to see you there!


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