Written by Tim FitzGerald, Financial Services Manager, InterSystems UK & Ireland
Wealth management firms are facing a constantly evolving regulatory landscape, in which the demand for accurate and timely reporting data is only getting greater.
At a time when they’re already under the strain of suppressed margins, heightened competition, and global political, economic, and climate volatility, these increased data demands place additional pressure on the people, processes, and systems within wealth management firms.
According to The Bank of England’s Future of Finance report, UK banks stack up a huge £2 billion to £4.5 billion in regulatory reporting compliance costs annually. New initiatives like Basel 3.1 and EMIR 3.0 are only adding to reporting pressures, The Prudential Regulation Authority (PRA) in the UK plans to introduce 19 new and revise 12 existing COREP templates for Basel 3.1; and EMIR 3.0, introduces more than 80 new data field requirements.
Global research by InterSystems, which surveyed 375 asset managers at mid-market firms, found that 44% of respondents consider responding to regulators to be one of their key data management challenges. The elimination of errors and the need to improve risk management were also cited as top three challenges.
Fortunately, innovations in data management are enabling organisations like asset management and wealth management firms to address all three challenges at once: by gaining real-time, on-demand visibility and utility from across all their existing legacy enterprise data and applications.
Creating new data-driven opportunities
While the introduction of new regulation and compliance requirements can create or exacerbate current data challenges, it also acts as an opportunity to improve efficiency, client engagement, collaboration, and innovation. Fortunately, new approaches to handling vast amounts of disparate data have come to the fore that effectively address this opportunity and create competitive advantage. They do so by enabling firms to better process data from both within and beyond the enterprise, which minimises the costs a business incurs, in terms of both time and money, to achieve regulatory compliance.
By leveraging a 360-degree view of data from inside and outside the organisation, wealth management firms can enhance trading activity visibility, better manage risk, and better identify investment opportunities for clients, among many other tasks. The need to cleanse and standardise data arising from regulation will undoubtedly offer broader business benefits too. This strategic approach to regulatory reporting can turn the drudgery of compliance into an opportunity for efficiency and growth.
Obtaining accurate and timely data
The advent of the ‘smart’ data fabric is one strategic approach that can help financial teams obtain the clean and harmonised data they need for effective reporting. It is an approach to data management that delivers results in near real-time. As an architectural layer, it simplifies complex data infrastructures without replacing existing systems or engaging in drawn-out IT projects, maximising existing investments in technology.
Instead, the data fabric sits on top of a firm’s infrastructure, complementing it and connecting data across the enterprise to deliver one unified version of the data. The result is access to timely, error-free data that an organisation’s compliance function can rely on for reporting.
The ‘smart’ data fabric approach enables the all-important end-to-end aggregation and integration that is essential for high-quality data. It incorporates embedded analytics, giving fast access to data to those who need it for reporting and investment decisions. It does this without copying the data, and so reduces errors and inconsistencies that constantly undermine confidence and risk problems with regulators.
In an industry where regulation is increasing in both volume and complexity, access to a single source of the truth helps to reduce risk and enables organisations to better understand their allocation of assets and employ them more profitably in compliance with the complexity of regulation. This enhanced insight into risk and exposure improves compliance, while ease of access to the right data fulfils the need to respond quickly to regulators’ reporting requirements.
The transformative effect of accurate and timely data
Access to timely and accurate data can have a transformative effect on wealth management firms. Today’s wealth management customers want to see how their money is performing in near real-time and access personalised, up-to-date financial advice. However, it is only through having access to reliable, clean data that wealth management firms can provide this information to clients.
Using the insights uncovered from their data, firms can launch new products and services dynamically, keeping pace with changing customer needs. Without having the correct data foundations in place, this is simply not possible.
A more data-driven organisation
Ultimately, by employing innovations such as smart data fabrics, wealth management firms can obtain the kind of data-driven capabilities that will transform their performance beyond the requirements of regulators. They will become far more innovative, agile, and personalised, meeting the varying demands of their customers.
