Bigger isn’t always better when it comes to member services. Megafunds might be able to mass customise, but when you’ve got two million members it’s tough to bring the personal touch.
The famous and closely watched US endowment model took a hit in FY23, with smaller, equity-heavy investors taking the lead. But the longer-term superiority of a chunkier exposure to alternatives remains unchallenged.
Institutional investors hobbled by data dearth: State Street
More than 80 per cent of the 520 institutions surveyed for State Street’s latest Data Opportunity Study believe the opportunities arising from enhanced data use and management will be “significant” – but few have completed data transformation programs and many are working from outdated platforms, with asset owners and alternatives managers at the back of the pack.
“The ability to support growth agendas, whether by offering new products, expanding into new asset classes and geographies, or launching new business lines all require a robust and flexible data foundation,” John Plansky, head of State Street Alpha, said in the report. “Forward-thinking asset managers that re-evaluate their operating models and retire accumulated technology debt will be well-positioned to thrive in an environment of constant change.”
Nearly 80 per cent of respondents reported needing to upgrade at least a quarter of their existing tech capabilities to meet their goals, while slightly more than 40 per cent expect to upgrade half. APAC investors were particularly pressed, with 60 per cent selecting tech as a “priority focus” – substantially higher than in the Americas and EMEA.
Most respondents don’t have what State Street calls a “holistic data strategy” either. That’s where data is sourced from across the investment lifecycle – including front, middle and back office and third party data – and then integrated and maintained to provide “an interactive view for analysis and decision-making”. Around 65 per cent of asset owners improved their investment returns by at least 10 per cent by deploying one, while 75 per cent of traditional asset managers saw a 10 per cent increase in customer retention.
“(Organisations) see it as an enabler for enhanced decision-making beyond tactical reporting or cost control measures,” said Tim Helyar, State Street country head for Australia. “In Australia, asset owners are particularly interested in achieving a ‘whole of fund’ view. They want to understand where complex strands of data from multiple sources, some external – and across disparate areas of their portfolios – are from the start of the trading day, and every day.”
Almost all respondents – 98 per cent – were open to outsourcing their data technology needs, with bigger institutions (in the $250 billion and above range) getting comfortable with outsourcing more than half of their data management. Meanwhile, institutional investors of all shapes and sizes expect to partner on areas like data visualisation, analysis and reporting over the next two to five years.
