Waters USA 2013: Data Leaders vs. Data Laggards

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Originally presented at Waters USA, this presentation features highlights from our Data and Analytics Survey conducted by the Economist Intelligence Unit.

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Waters USA 2013: Data Leaders vs. Data Laggards

  1. 1. DATA & ANALYTICS Data Leaders vs. Data Laggards How the investment industry is — and isn’t — harnessing the power of data and analytics. Featuring highlights of the State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit
  2. 2. DATA & ANALYTICS How Big is “Big Data” • 2.5 quintillion bytes of data are created every day.1 • Global IP traffic is projected to reach 554 billion gigabytes per month by the end of 2016. 2 That’s more than 110 times all of the information estimated to have been created — ever — until 2003. 1‖Customer 2Global Analytics Pay Off,‖ IBM, January 2012. Cloud Index; cited in Transforming Experiences, from Devices to Datacenters, Intel, April 10, 2013. 2
  3. 3. DATA & ANALYTICS About the Research A global survey of more than 400 asset managers and institutional asset owners on investment data and analytics, conducted by the Economist Intelligence Unit on behalf of State Street (August and September 2013). Respondents by Region Respondents by Type 8% 20% 33% 8% 34% 16% 18% 19% 11% 33% North America Europe Asia Pacific  Diversified Asset Managers  Traditional Asset Managers  Alternative Asset Managers Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit  Banks  Insurers  Pension Funds  Other 3
  4. 4. DATA & ANALYTICS Disruptive Industry Trends Require a Rethink of Data Strategies Issues Most Likely to Drive Change in Data Strategy Over Next Three Years Asset Owners Asset Managers (Top three issues cited) (Top three issues cited) More stringent risk More stringent risk management standards management standards Growing volume of Growing volume of trading data trading data Expansion new Expansion into into new regions regions 38% 34% 33% Increased demands Increased demands from regulators from regulators Competitive pressure Expansion into new Expansion into asset classes new asset classes Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 37% 35% 33% 4
  5. 5. DATA & ANALYTICS The Industry is Investing Heavily to Keep Pace % Change In Investment into Data and Analytics Over Past Three Years 2% 11% 1% 11% Significantly increased investment (>20%) Slightly increased investment (1-20%) Made no change Slightly decreased investment (1-20%) 75% Significantly decreased investment (>20%) Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 5
  6. 6. DATA & ANALYTICS Data and Analytics Capabilities are a Priority for Institutional Investors Data is the Key to Addressing a Wide Range of Strategic Concerns 1% 8% 37% • Nine out of 10 institutional investors view data and analytics as a high strategic priority • For 37 percent, data and analytics as the most important strategic priority 54% Most important strategic priority High strategic priority Mid-level strategic priority Not a strategic priority Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 6
  7. 7. DATA & ANALYTICS Transforming Volume into Value Top Challenges Related to Investment Data and Analytics Accuracy of data 37 % Lack of integration between different data sources and types 34 % Timeliness of data 34 % Ability to customize data to suit different end user needs 31 % Ability to extract broader themes and forward-looking insights from data 29 % Increased volume of data 29 % Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 7
  8. 8. DATA & ANALYTICS The Industry is Polarized by its Approach Data is a competitive asset … But few know how to use it • 66 percent believe data will be a key source of competitive advantage in the future • Only 29 percent of firms are reaping the full benefits from their data and analytics capabilities today • 86 percent increased investment in data infrastructure in the past three years An Industry Divided by Data • Our research reveals that a capability gap is opening up between data leaders and data laggards 1. ―Data Leaders‖ – Companies in the survey whose data and analytics are already a source of competitive advantage 2. ―Data Laggards‖ – Have yet to gain full benefit from their data Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 8
  9. 9. DATA & ANALYTICS Data Leaders are Better Prepared for the Challenges Ahead Leaders Data leaders are more confident in ... Laggards % confident in capability  70% • Generating forward-looking insights from data 42% 72% • Integrating risk and performance analytics 50% • Optimizing their electronic trading strategies By contrast, data laggards are … • More likely to get distracted by the complexity of data management X 64% 53% % agree with statement 7% 30% • Less likely to feel their data capabilities are keeping pace with the growth of their business Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit 92% 50% 9
  10. 10. DATA & ANALYTICS Five Steps to Go From Laggard to Leader 1. Improve risk tools with multi-asset class capabilities. • Integrated risk and performance analytics • Risk and analytics tools that have multi-asset class capabilities • More holistic, flexible and actionable risk tools • Factor-based risk systems Risk analytics is an area where fewer institutional investors express confidence in their capabilities, as portfolios grow more complex and diversified. 10
  11. 11. DATA & ANALYTICS Five Steps to Go From Laggard to Leader 2. Develop better tools to manage regulation in multiple jurisdictions. • Systems that are supported by up-to-date regulatory expertise • Systems that include rule-sets to help manage compliance requirements • Customizable reporting tools integrated with the necessary databases Approximately one-third of respondents emphasize the importance of being able to extract insights from multiple data sources and the need for flexible, modular systems that will grow with the business. 11
  12. 12. DATA & ANALYTICS Five Steps to Go From Laggard to Leader 3. Improve the ability to manage and extract insight from multiple data sources. • Create data warehouses to integrate multiple databases and sources into a ―single version of the truth‖ • Use advanced analytics to find new ways to extract insight from overwhelming amounts of data • Developing efficient processes to capture, clean and transform data, together with the right governance to assure data integrity Integration issues are often the key barrier to preventing investment firms from achieving their goals with data. They are also one of the biggest frustrations with traditional vendor solutions. 12
  13. 13. DATA & ANALYTICS Five Steps to Go From Laggard to Leader 4. Optimize electronic trading platforms. • Better integrated electronic trading platforms. • Need for integrated OMS/EMS and multi-asset class trading platforms. • Need for products/services that can support trading and clearing needs with regulatory changes. When asked where they will spend more money, respondents highlighted order management and execution management systems (cited by 86 percent of respondents) and portfolio optimization tools (76 percent of respondents). 13
  14. 14. DATA & ANALYTICS Five Steps to Go From Laggard to Leader 5. Develop a scalable data architecture that will grow with your business. • Technology with scalability to handle growth and diversification • Systems that support global reporting • Support for rapid product innovation Institutional investors need a flexible data infrastructure that can keep pace with evolving client needs and regulations — as well as flexibility to manage new asset classes, complex mandates and offshore assets. 14
  15. 15. DATA & ANALYTICS The Bottom Line • Firms that develop the right data tools and strategies will be rewarded with better insights, improved performance measurement and a deeper capacity to understand risk across their global activities • These advantages will be the edge that defines our future industry leaders This document is for marketing and/or informational purposes only, it does not take into account any investor's particular investment objectives, strategies or tax and legal status, nor does it purport to be comprehensive or intended to replace the exercise of a clients own careful independent review regarding any corresponding investment decision or review of our products and services prior to making any decision regarding their utilization. This does not constitute investment, legal, or tax advice and is not a solicitation to for products or services or intended to constitute any binding contractual arrangement or commitment by State Street and/or any subsidiary referenced herein to provide securities services. State Street hereby disclaims all liability, whether arising in contract, tort or otherwise, for any losses, liabilities, damages, expenses or costs arising, either direct or consequential, from or in connection with the use of this document and/or the information herein. This document contains certain statements that may be deemed forward-looking statements, which are based on certain assumptions and analyses made in light of experience and perception of historical trends, current conditions, expected future developments and other factors believed appropriate in the circumstances. © 2013 State Street Corporation CORP-0915 15

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