Institutions Harness Big Data

Terry Flanagan

Institutional investors are being challenged by Big Data, according to a study released by State Street Global Exchange.

The study, conducted in collaboration with the Economist Intelligence Unit, surveyed more than 400 institutional investors globally and revealed an industry that’s divided between data leaders and data laggards. Leaders are companies that harness data and analytics for competitive advantage and laggards still struggle to manage and exploit the full potential of their data.

The study found that institutions are dealing with accuracy of data, the lack of integration between different data sources and types, and timeliness of data.

Although two-thirds of executives say that leading-edge data and analytics capabilities will be among their most important competitive advantages in the future, while only 29% strongly agree that their firms are already gaining a competitive advantage from their data toddy, 22 % have a high degree of confidence in their ability to optimize electronic trading strategies, and 22% think their benchmark data is a significant strength.

“The pace and volume of change in the financial markets are pushing institutional investors to become more nimble and wield data strategically,” said Jeff Conway, executive vice president and head of State Street Global Exchange. “Data without the ability to deploy it to solve a problem is just noise. As investment opportunities are increasingly harder to identify and more complex to execute, firms that can prioritize their approach to data management will emerge as leaders.”

Data leaders are better equipped to manage these challenges and convert Big Data to smart data. They excel at extracting insight, managing risk and performance, and trading electronically.

“The core of our business is in FX, and we have expanded into fixed income through our SEF, so helping clients manage the explosion of data as asset classes move to electronic trading is a natural extension of our business model,” said Martine Bond, head of trading and clearing at State Street Global Exchange.
Among the steps necessary to become a data leader are improving risk tools with multi-asset class capabilities, developing better risk management, optimizing electronic trading platforms, and extracting insight from multiple data sources.

“The capabilities and strategies that firms put in place today will lead to data systems that need to serve the business for many years to come,” said Conway. “Harness the value of Big Data isn’t just about investing in technology, it’s about having the right teams as and partners in place to turn volume into data.”

Over the next three years, 89% of survey participants identified as leaders plan to raise their investment in order management and execution management systems, 77% plan to invest in portfolio modeling and optimization systems, 70% say they plan to invest further in benchmark data and 64% expect to increase their investment in risk analytics.

State Street Global Exchange provides research and advisory, portfolio performance and risk analytics, and electronic trading and clearing to enable asset managers to execute investment decisions efficiently.

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