State Street Global Exchange released today the following insights about the future of data and the institutional investment industry, which can also be found in a new report 1, “Leader or Laggard: How Data Drives Competitive Advantage in the Investment Community.” The study, conducted in collaboration with the Economist Intelligence Unit (EIU), surveyed more than 400 institutional investors globally and revealed an industry that is divided between “data leaders” and “data laggards.” The former are companies that harness data and analytics for competitive advantage and the latter still struggle to manage and exploit the full potential of their data.
The most pressing challenges that emerged as key concerns for the industry center on the volume, velocity and variety of data. Respondents noted challenges including the accuracy of data (37 percent), followed closely by the lack of integration between different data sources and types, and timeliness of data. Although two-thirds of executives agree that leading-edge data and analytics capabilities will be among their most important competitive advantages in the future, only 29 percent strongly agree that their firms are already gaining a competitive advantage from their data today. 22 percent have a high degree of confidence in their ability to optimize electronic trading strategies and 22 percent 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 who 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.