Buy-Side Tech Consolidates

Terry Flanagan

Buy-side firms continue to look for integrated solutions, while North American firms specifically focus on client-servicing capabilities.

Often deemed as the most “unglamorous” aspect of the financial services industry, data management systems and buy-side vendors have ramped up activity since the financial melt-down of 2008. Compliance, efficiency and automation remain to be the key themes for financial services.

“The financial crisis was the catalyst for changes happening in the industry, and today institutions are allocation 25% of their budget to spending on technology infrastructure versus other management projects,” said Daniel Mayo, practice leader at industry analyst firm, Ovum.

For buy-side firms, the emphasis is of course maintaining regulatory compliance but more so, automation of such processes, said Mayo.

“They’re also interested in amplifying the frequency of reporting to clients, transparency, and they’re taking a medium to longer approach to putting in place infrastructure rather than a short-term cost-saving approach,” he said.

In North American, buy-side firms are focusing highly on technology to enhance their client-facing and servicing capabilities, according to Mayo. North American firms have a broader “array of investment priorities,” than firms in Asia and Europe.

Buy-side firms that transact in over-the-counter (OTC) trades can expect to spend more on their platforms in the OTC arena, as well. Largely said to be responsible for the on-set of the Dodd Frank Act, “trying to get consolidated data in the OTC space is still challenging for multi systems,” said Ebbe Kjaersbo, chief business consultant of SimCorp North America, a buy-side technology provider.

Today, an enterprise solution, which to some is a consolidated, one-stop shop platform, is paramount for buy-side institutions. Without it, “data oversight is siloed with no optimization of costs, and data quality management lacks framework,” said Zach Maupin, vice president and manager of data integrity and operations analytics at Nuveen Global Operations.

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