By John Gout, Director, Funds, Netherlands, and Vera Huang, Head of Data Solutions, Asset Owner Solutions
In today’s data-driven financial landscape, institutional investors are increasingly recognising the pivotal role of robust data management to achieve superior investment outcomes and operational efficiency. However, according to a report from Worldwide Business Research (WBR) Insights and Rimes, only 25% of financial organisations can effectively source and manage all their data inputs.
Effective data management not only enhances decision-making but also ensures regulatory compliance mitigating the risks associated with inaccurate or inconsistent data. This article looks at why data management is crucial for institutional investors and how it impacts their performance and strategic success.
With the growing complexity of financial markets and the increasing volume of data, a streamlined data management strategy is more important than ever.
Enhanced decision-making
High-quality, well-managed data provides institutional investors with accurate and timely insights, enabling informed investment decisions. Effective data management systems ensure that data is clean, consistent, and readily available, which is crucial for analysing market trends and assessing investment opportunities across sectors and asset classes. A recent Deloitte survey concluded that up to 73% of all data remains unused for analytics.1 underscoring missed strategic opportunities and highlighting the critical need for a robust data strategy.
Operational efficiency
Research commissioned by data technology provider InterSystems reveals that two-thirds of respondents require six to nine people to process data to meet business stakeholder needs. Proper data management streamlines operations by reducing manual processes and minimising errors. Automated data processes and integrated systems can significantly decrease the time spent on data reconciliation and reporting, allowing investment professionals to focus on strategic analysis rather than data correction.
Regulatory compliance
Adhering to stringent regulations, such as MiFID II, AIFMD, GDPR, and SFDR, requires precise data management practices. Inaccurate or incomplete data can lead to compliance issues and result in hefty fines or sanctions. Effective data management ensures that reports and disclosures meet regulatory standards, thereby safeguarding the institution’s reputation and avoiding legal repercussions.
Risk management
Reliable data management helps in identifying and mitigating risks by providing a clear and accurate picture of an institution’s financial position and exposure. By managing data quality and integration effectively, institutional investors can better anticipate potential risks and implement appropriate risk management strategies.
Recent insights and trends
The adoption of advanced technologies like artificial intelligence and machine learning is transforming data management, enabling more accurate data analysis and reducing error rates. For instance, a recent survey done by IQ-EQ drew on around 30 senior executives within private equity firms, demonstrates that some 82% of firms still employ manual tools in their operations and, despite advances in technology and artificial intelligence, are still dependent on data spreadsheets and legacy tools for data collection, reporting and onboarding.
The overwhelming majority (96%) of private equity firms believe that technology is a “value-creation lever” and can add value throughout the investment lifecycle, although the industry remains overly reliant on manual systems and processes, according to a new survey from IQ-EQ.
93% of respondents ranked technology transformation as one of their top three business priorities over the coming 12 to 24 months.
Regulatory pressures
With evolving regulatory frameworks, maintaining data integrity and compliance has become increasingly critical. In the Netherlands, the AFM and DNB emphasise the need for robust data management practices to ensure compliance with national and EU regulations. The DNB publishes guidelines that stress the importance of data accuracy and transparency in prudential reporting, particularly under MiFID II and AIFMD.
Conclusion
The importance of data management for investors cannot be overstated. By investing in robust data management systems and practices, institutions can enhance decision-making, improve operational efficiency, ensure regulatory compliance, and build stronger client relationships.
How IQ-EQ can support you
If you’re interested in learning more about how our data warehouse infrastructure, visualisation tools, and portfolio management solutions can help you build a robust data infrastructure, please reach out to us. Our solutions will help you to achieve more accurate reporting, improve decision-making, enhance operational efficiency, ensuring better compliance.
About the authors
John is a Director, Funds for IQ-EQ, based in the Netherlands. He is an accomplished sales executive with a distinguished career spanning over 30 years in the financial services industry. John has demonstrated expertise in spearheading comprehensive sales initiatives across diverse sectors, including institutional investors and asset management.
Vera is Head of Data Solutions, Asset Owner Solutions, for IQ-EQ, based in London. With over a decade of international experiences in fintech, financial services, and consulting, Vera is a passionate and driven professional that enjoys solving data challenges for the private markets and is an expert in solutions engineering, customer relationship management and product consulting.
