Data rich, insight poor – how can managers harness the power of their own data

The second of our series of bite-sized articles on data transformation looks at the most common data-related problems impacting alternative asset managers.

8 January 2025 - Most executives at alternative asset managers are well aware of data’s critical role as they seek to evolve and grow in a world of expanding operational complexity, growing regulatory burdens, and rising costs.

Each manager’s approach to data strategy depends on their data maturity. In the Citco group of companies’ (Citco) experience, most managers are at one of three stages:

• Mature – already building and refining their data strategy
• Emerging – they recognize they have data challenges but have not yet implemented a solution
• Unfamiliar – they are largely unaware of how a data strategy could benefit them and solve their business needs

Irrespective of their varying data sophistication, Citco recognizes that today’s Chief Financial Officers (CFOs) and Chief Operating Officers (COOs) face a common challenge to manage, interpret, and contextualize the deluge of information across their businesses. They know data is a strategically important asset, but connecting their data transformation products with insights to solve their strategic and operational problems presents a formidable challenge.

The first step in overcoming this obstacle is to ensure they have quality data at their fingertips. Quality data is crucial to many aspects of alternative investment management; but for data to be meaningful, it must be reliable, timely, intelligible, and actively managed.

Citco Data Services helps to transform client data into actionable insights to deliver measurable value. Below we look at this in more detail, assessing what data managers should seek, when they need to use it, and who needs to drive it forward within the business to get the desired outcomes.

• WHAT – types of data should managers focus on?

  + + -

  Managers typically receive more data related to defensive protection (i.e. risk and cost reduction) than offensive growth (i.e. revenue opportunities).¹ With this in mind, they should seek the “low hanging fruit” of defensive goals while also remaining attentive to datasets that may pertain to specific offensive goals.
  

  • Defensive data: Cybersecurity, Regulatory requirements, Auditing & transparency.
  • Offensive Data: Investment alpha, New markets and products, Business development.

  ¹ Bharwani, Sanjay, et al. How Fund Directors Can Govern the Usage of Data for Growth and Insights, While Maintaining Privacy and Trust. Ernst & Young, 17 Sept. 2021.
  

• WHEN – to identify desired business outcomes?

  + + -

  Citco Data Services’ approach here is to define first, then query. Managers should explicitly define the types of data they are seeking and link this information to desired business outcomes, then query their data accordingly. This avoids a “ready, fire, aim” approach to data strategy which frequently plagues even sophisticated managers. With so much information to analyze and consider across multiple asset classes and geographies, true insights can only be obtained by preemptively defining areas of focus.

• WHO – should join the data strategy conversation?

  + + -

  CFOs: CFOs benefit significantly from data-driven insights, such as optimizing investor due diligence and month end close processes, improving financial modelling and forecasting, or cataloguing ESG data for current and prospective investments to meet internal goals, regulatory standards, and investor demands.

  • Fit-for-purpose data views can be tailored to the different needs of end users, such as investment accounting, fund accounting, management company accounting, FP&A, investor relations, pricing and valuation, compensation teams, etc.
  • Financial statement preparation and disclosure requirements can be expediated and verified with automated data quality checks.
  • Accounting teams can easily query and compare data across multiple knowledge dates for forensic investigation.
  • Cost effective storage means teams can store historical data for longer, enabling more comprehensive back testing.

  ---

  COOs: COOs benefit from migrating middle-office and back-office data from disparate vendors and systems to a single platform, merging it with other third-party datasets (for example, portfolio companies or administrators), and accelerating the creation of custom reporting to power internal and external tools that turn data into insights for different audiences.

  • A data platform can act as a modern, flexible delivery method that suits the needs of diverse users, covering cash management, treasury, corporate actions, trade matching, and streetside reconciliation teams.
  • It can also reduce time spent switching between siloed systems and eliminates costs spent maintaining, reconciling, and collating data between different platforms.
  • All operations teams benefit by discovering new patterns and insights that may not be apparent in siloed data.

  ---

  Compliance & Regulatory Reporting: These teams benefit from robust governance features that are in place on modern data platforms like Citco Data Services. These include user group permissions and fine-grained access controls, with integrated data lineage visibility and governance checks to ensure that data is controlled and secure.

  • Audit requirements and regulatory enquiries are easily met by feeding data from diverse systems into a data platform that forms a “single source of truth.”
  • Regulatory reporting teams can securely receive and send large datasets in near real-time with other internal departments, auditors, and regulators.
  • AI tools incorporated into a data platform can intelligently scan marketing materials and investor correspondence to remain compliant with ever-evolving policies and regulations, routing exceptions to the appropriate teams (risk, marketing, legal) for swifter action.