The Road To Value From Data

Sometimes it's easy to forget that before one can address any of the reference data issues in the financial services industry, one first has to look at costs and resources. Speakers and panelists at the Toronto Financial Information Summit (FIS) on July 10 reminded us that careful planning, strategizing and operational choices are keys to spending less and making the most of resources available.

Bettina Wadehn, program director at the Canada Pension Plan Investment Board (CPPIB), framed this issue in terms of thinking about the value of data. "The true value really lies in the analytics, and ultimately the insights and the decisions that will be made based on this data—or driven by it," she said. CPPIB has been centralizing its data to support its investing choices and better understand its risk exposures and evaluate its performance against benchmarks. "The true asset we get from data is being able to make better investment decisions, and decisions for the future of the enterprise."

Similarly, Donna Rudnicki, Toronto-based head of data management at RBC, backs a centralized model at that firm, rather than loosely federating several data sources. Managing data is necessary to derive value from it, she said at Toronto FIS. There is a temptation to try to fix every issue surrounding data, but firms must resist this, she explained. "Think big, but focus small .... Pick a few key elements to focus on, and mobilize on those," Rudnicki said.

After choosing what data elements to focus on, as Rudnicki advised, firms have to then strategize about how they will address these elements, which Wadehn pointed out. For CPPIB, the choice has changed from being between one vendor and multiple vendors, to a choice on whether to outsource at all—or instead lean on building data management systems internally.

With data management having to support risk management, and keeping budget constraints in mind, data perfection is not always necessary, explained Ash Tahbazian, a senior vice president at State Street. Data users, particularly risk managers, would much rather "have something they can move forward with," he said.

Robert Neupauer, a director at UBS in Toronto, who focuses on hedge fund administration, said budgeting at his firm now requires preparedness for sudden, new regulatory requirements. "If the deadline for something is June 15, it's not like you can wait for the 2014 budget," he said. "You have to act fast. This means being flexible and being able to reallocate from lesser priority projects and then put the money where it matters."

Oliver Salvati, director of data management, group operations at Sun Life Financial, a Toronto-based global investment firm with several Asia-Pacific offices, said Sun Life looks at its "organizational construct" for data—whether it has the right organization in place to act on the framework it has established for data governance.

The takeaway, when one thinks about what budgets or costs permit for data management improvements—or at least readiness—is that a blend of centralizing data, setting data management frameworks and strategies, prioritizing the most relevant data and choosing data sources is what it takes to maximize resources to get the best possible reference data.