Data Transformation - making the most of the fourth industrial revolution
27 August 2024 - The 21st century data revolution has changed the world as we know it. Altering how we communicate, socialize and work, everything is increasingly done solely online, with more than five billion internet users worldwide currently. Underlying this revolution is one key component; data. The amount of data being created now is staggering, with internet users projected to create almost 147 zettabytes1 of data2 by the end of 2024.
As with most areas of business, data now sits at the heart of financial services organizations. Data on investments, clients and performance is everywhere, and its importance means roles like Chief Data Officer and Chief Technology Officer (CDO and CTO) have become increasingly prominent as companies look to support rapid growth and simultaneously create efficiencies via new ways of working.
Amid this data revolution, one problem facing many alternative asset managers is how to approach it to make sure it is a success, and that is why having a comprehensive data strategy is so vital. Alternative asset managers need several crucial elements - including “good” data, the right tools, and also the right culture - if they want data to permeate effectively throughout their organizations via a “data first” mindset. Data transformation is the process to help achieve this. It is the journey alternative asset managers need to take towards effectively leveraging their own data to support business goals and objectives.
The data transformation process can involve several steps and technologies to build a comprehensive data model, with the ultimate goal of fostering data-driven decision-making which enhances operational efficiency and provides a competitive advantage. A core part of any data transformation project is making sure you have the right data to work from – after all, if you put bad data in, you will get bad data out. Once the data has been collated and verified, the use of various tools and services – including document management plug-ins, investor portals, data platforms and CRM systems can be used to make the most of that data. Artificial intelligence also plays a part of any data transformation strategy. Robotic Process Automation, Machine Learning, Natural Language Processing and Large Language Models are specific disciplines within AI which can be used to help enhance a companies use of data.
What is also important to note is there is no blueprint here. Alternative asset managers will have different data sets, different ways of collating data, and different goals they want to achieve by utilizing that data more effectively. Data transformation projects are therefore a bespoke service tailored to meet a specific client’s data and needs.
Key components of data transformation -
How can alternatives managers approach data transformation projects?
The role of people and technology
Expertise and technology are crucial to making data transformation a success. A centralized data platform serves as the foundation for implementing data transformation, providing a single source of truth for all data-related activities. It can offer a comprehensive suite of capabilities to support data management, governance, integration, analytics, and collaboration.
Interoperability with service providers and vendors is also vital to the success of any data transformation project, and the Citco group of companies (Citco) continues to invest in data sharing, enabling secure and seamless data exchange between different systems and organizations.
Managers also need to consider what skillsets they have internally and whether they can effectively marry together data science expertise with asset class knowledge in order to truly harness the power of data.
What can it do for your business?
A comprehensive data model with a defined data strategy for data storage, flows and output mechanisms - all underpinned by high-quality data - empowers alternative asset managers by making the data they need readily available, accurate, consistent, and meaningful.
Many alternative asset managers are already on this journey. Whether they specialize in private equity, private credit, hedge funds, real estate, or operate as a multi-asset platform, managers are increasingly reviewing how they can integrate data more effectively. Data transformation can play a pivotal role in enabling managers to harness the full potential of their data for better performance, risk management, and investor satisfaction.
From Citco’s own experience working with clients on data, positive outcomes from a comprehensive data strategy can include:
- More effective risk management
- Enhanced reporting to end clients
- Personalization
- Streamlined due diligence
How can Citco help?
Citco has extensive and rapidly expanding experience assisting clients with data transformation projects. We offer a diverse range of processes, skills, and technologies to help alternative investment managers approach, design, and implement successful data transformation initiatives.
Crucially, we understand how to offer bespoke services, and in an emerging area such as this, where no two clients’ have the same data sets, operating models, or end goals, that ability to be flexible and tailor solutions is a must have.
1 One zettabyte is equivalent to a trillion gigabytes
2 https://edgedelta.com/company/blog/how-much-data-is-created-per-day