Key Takeaways
- Buy-side data management is a critical component for firm growth and performance improvement.
- Consolidating data into a central platform streamlines processes and ensures access to real-time data.
- Buy-side firms should elevate their tech stack to stay competitive and get the most value from data insights.
Many buy-side firms face the perennial dilemma of doing more with less. As investors seek more low-fee ways to trade, investment managers need a modern way to remain competitive and lean. Another part of this new environment is the massive amount of data available to drive better and faster decision-making. It’s a perfect storm for a new way to differentiate and succeed, and comes with the adoption of buy-side data management platforms.
Modernization Creates Challenges
While buy-side portfolio management software provides a path toward modernization, organizations face challenges, including:
- How will they aggregate data from multiple sources?
- What will they do with legacy systems?
- How can the system analyze the data quickly for insights?
- Will they need additional resources, which they don’t have, to administer this new technology?
All these are relevant questions to ask of any firm. However, there are solutions that remove these obstacles and give organizations a proven way to do more with less.
What Is Buy‑Side Data Management?
Buy-side data management describes the strategic process of aggregating, managing, and verifying vast amounts of data. The data is both internal and external. It can include research, pricing, and alternative data.
Asset managers and hedge funds use this information to make data-driven decisions.
Why Traditional Buy‑Side Data Approaches Fall Short
Gaps exist for most firms in this area because of legacy systems that cannot aggregate, manage, and verify without extensive manual work. There may also not be ways for data to be real-time and accessible. Further, using disparate systems creates bloated workflows that are inefficient and flawed.
Why the Investment Management Industry Is Ripe for Modernization
Every industry wants to achieve operational efficiency, reduce costs, and generate more revenue. Most can accomplish some aspect of these goals with the right technology. There have been some significant shifts in the investment management sector that align with the new ideas of using big data, AI, and machine learning to stand at the new frontier.
First, the cloud’s ability to store historical data cost-effectively meant firms could keep this data around for analysis. As data continues to grow from many different systems, internal and external, the cloud can scale to accommodate this. Cloud-based data management solutions for the buy side enable firms to obtain value from all this information.
Second, AI and machine learning are now mainstream and deployable in data clouds for multiple buy-side use cases, including:
- Accessing more expansive datasets that AI-based algorithms can analyze rapidly
- Improved forecasting based on data, not intuition
- Greater personalization for clients with AI streamlining the buyer journey, so they get the most relevant information
- Predictive modeling to identify signs that clients might be considering other investment firms so that firms can respond quickly
Third, application programming interfaces (APIs) also modernize the “connections” between systems. Web-based APIs link data systems in real time, so data is accurate and offers greater visibility into the landscape. APIs enable communication between systems, eliminating time-consuming manual work and slow responses to sudden changes.
From these insights, investment managers can make better decisions on behalf of clients. It provides a competitive advantage that is necessary in today’s market.
With these emerging technologies and a new perspective, buy-side data management is more innovative than ever. So, how do firms begin this transformation?
Challenges and Opportunities in Buy-Side Data Management
Buy-side data management involves organizing and using data to drive insights for traders. It should lead to better decision-making. While many organizations realize the value of managing data, there are challenges.
In a report on firms and their use of buy-side data management, these data points demonstrate many of the issues:
- 52% said the complexity of their needs impacted their ability to use data management systems.
- 39% of respondents noted data governance and controllability concerns.
- 81% of investment managers were dissatisfied with their data management approach.
Traders love data, but harnessing it comes with many issues, namely accuracy, accessibility, and timeliness. Data siloes are the biggest enemy and create aggregation and storage problems.
Patching, Data Lakes, and Modernization
Historically, the process was to patch systems together through vendor-supported interfaces or by building proprietary ones. This was costly and required a lot of internal resources. Scaling this was practically impossible, as well.
Next came the idea of using data lakes or warehouses to solve the problem. They weren’t feasible either, requiring lots of time and resources to build and maintain. Legacy systems and outdated technology also impacted the use of these methods.
Data storage through warehouses was also something firms tried, but most had on-premises software solutions. Continuing to use on-site servers became cost- and resource-prohibitive.
The solution to these rests back in the innovation discussed earlier — the cloud, AI, and APIs. The cloud is a scalable, secure place for all the data to reside. AI supports analytics and insight generation, and APIs connect systems seamlessly.
By modernizing the approach to buy-side data management, opportunities emerge that make data the driver of the competitive advantage traders desire. For investment firms to leverage the cloud, AI, and APIs, they need comprehensive buy-side software.
Buy-Side Software Changes the Game for Investment Firms
The buy-side technology stack is essential for modern firms to operate efficiently, grow revenue, and retain clients. Data challenges in the front office are solvable by streamlining data workflows. The software-as-a-service (SaaS) model fits this need well with all the modern components necessary for buy-side activities.
Buy-side portfolio management software automates many essential functions, including:
- Portfolio/fund accounting, valuation, and analytics
- Reconciliation
- Performance measurement and attribution
- Reporting
- Billing
They can also offer access to:
- Transaction history
- Historical holdings and pricing
- Client portals for logging in and checking accounts
This is one component. More solutions enhance the value of this data, as well. Firms should also look for:
- Business intelligence reporting tools: AI powers business intelligence insights that enable traders to aggregate important information that helps traders make more informed decisions.
- Back-office managed services: Managed data service solutions on the buy side provide an outsourcing model. It has clear benefits for firms in data and IT services. Experts take on these responsibilities, reducing costs and improving processes.
All these capabilities are available with INDATA buy-side management software. Firms also don’t have to worry about long, complex implementations. It’s web-based, so no IT is required. Organizations can choose from private or public cloud options and take advantage of AI tools built into the platform.
Modern Data Management with INDATA iPM
The INDATA iPM ecosystem supports data aggregation and analysis across the enterprise. It uses a private-public cloud hybrid to ensure access to real-time information. As a result, firms can make data-driven decisions based on accurate data.
Future-Proof Buy-Side Data Management With INDATA
Buy-side firms are at a pivotal time — innovate or lose market share. The key to successful innovation is the right technology partner. Firms trust INDATA solutions to give them the advantage they need with intuitive software that supports their needs today and tomorrow.
See modern data management in action.
FAQs
What does “modernizing buy‑side data management” actually mean?
Modernizing buy-side data management involves using SaaS-based platforms to aggregate and analyze information in a single ecosystem. This ensures easy access to accurate data, supporting better decision-making.
Why do buy‑side firms need to modernize their data management now?
Firms should update how they manage data because it’s their most valuable asset. Legacy systems and disparate platforms create data siloes, which impact performance and efficiency. Upgrading provides streamlined processes to get the most out of data.
What benefits does a modern data‑management system bring to asset managers?
A modern data-management system helps firms be more nimble and flexible in how they use data. It also ensures information is fresh and delivered in real time. It can also automate manual processes, reduce operational costs, enhance compliance, and accelerate time to insight.
How does a unified data platform support investment strategy and analytics?
A unified solution consolidates fragmented data, which resides in many places, into a single source of truth. Doing so eliminates the need for manual reconciliations. With innovative capabilities like AI, the analysis aspect becomes easier, faster, and more accurate.
Is modern data management just an IT upgrade, or a strategic imperative for buy‑side firms?
It’s a strategic initiative for buy-side firms. Historically, this was back-office initiated, but now, data management directly impacts their competitiveness, alpha generation, and operational effectiveness.
