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Asia-Pacific asset managers bet big on big data
Holistic strategies, AI to power growth, improve returns, run more efficient operations
Kevin Hardy 15 Nov 2023

Asset managers in the Asia-Pacific region are bullish on the ability of improved data management across their organizations to enhance their performance across a range of indicators, as they push ahead of their global peers in implementing data strategies.

The high-inflation, low-growth economic and market outlook in recent years has given new impetus to digital transformation aimed at improving investment returns and running more efficient operations. Front-office data – including portfolio analysis, asset allocation and client facing functions like distribution and communications – especially with more digitally savvy retail investors, are core to these trends.

In our recent Data Opportunities Study of more than 500 institutional investors across the globe, we found that 55% of respondents from asset managers in Asia-Pacific acknowledged the opportunity presented by improved data management and data usage across their firms was either “large” or “transformational” – and were more likely than their peers in other regions to see investment in data management as an overall benefit (46% of global asset managers answered as above).

While data is central to the investment process, and effective management of data can uncover new insights, many firms are struggling with the issue of data centralization. Across Asia-Pacific, nearly half (48%) of asset managers already have a holistic data strategy in place, which was in stark contrast to their peers in Europe where only 26% of managers said this was the case. Decentralization has the potential to create an additional data management burden, but centralized platforms that pull in data and then deliver information to data consumers is resource intensive.

The study found that managers are seeing the fruits of their investments in technology and data where more than half of Asia-Pacific managers with holistic data strategies in place cited at least 10% improvements in nearly every area under consideration.

This optimism around the power of data to unlock dramatic improvements in performance is in part a continuation of the ongoing interest in big data as a growth engine that has increasingly characterized business strategies across industrial sectors since the start of the internet age.

But that narrative itself has been augmented, and its projected timeframe fundamentally altered by more recent technological developments, in particular, the sudden advances in the power and functionality of artificial intelligence (AI).

Asset managers in Asia-Pacific saw benefits from AI across a range of business functions, with 48% citing personalized investment advice  more than any other category  as the area in which their businesses stood to gain most. And, already, managers in the region are making use of AI and robotic process automation in their data verification processes, as well as understanding their client base via sentiment analysis programmes.

A foundational aspect of next-gen data management is eliminating silos and harnessing interoperability within the ecosystem of external technology providers. Institutions across Asia-Pacific are fast evolving in this space.

Approximately half of respondents (48%) in the region noted that interoperability across front-, middle- and back-office functions was either “good” or “very strong” and was yielding tangible benefits, including better and faster decision-making in the front office and better access to back-office data.

This is where open application programming interface standards have much to offer. Cloud native architectures help to improve resilience, agility and scalability, which support productivity, efficiency and the adoption of new initiatives in areas such as AI.

The asset management industry in Asia is strongly positioned to take advantage of the growing significance of data. Asia-Pacific has proven itself to be an important growth and innovation centre for financial services in recent decades, and it is well positioned to leverage the next generation of data technology that is set to characterize growth in the sector for the remainder of the 21st century.

Kevin Hardy is the head of Singapore and Southeast Asia at State Street.

 

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