By Jamie Stevenson, Managing Director, Global Head of Product Management, Data & Analytics at RBC Investor & Treasury Services
Technology evolution has long been synonymous with financial services, and its most recent digital advancements in areas such as data are now rapidly providing opportunities for previously untapped analysis and insights.
Data strategy has become a key focus of discussion between asset servicers and its asset management, institutional investor and pension clients. Custodians are now spending more and more time immersed in the worlds of their clients to investigate and understand what they do with the (often mountains of) information that we provide.
Many clients lack the time and expertise to keep pace with rapidly-advancing technology. Asset servicers, on the other hand, are uniquely positioned to leverage data to help clients oversee their back-office, provide insights into the distribution of their funds, improve their investment and risk portfolios and support innovation. To reflect these new priorities, custodians are building on their technology expertise and recruiting a wealth of talent from universities in disciplines such as disruptive technologies and big data.
There are three main areas of focus when activating a practical data program. First the use of APIs (Application Programming Interfaces): the relationship between asset managers and asset servicers generates large amounts of data which are shared through traditional channels such as SWIFT, file transfers, spreadsheets, online and fax. APIs are optimizing this process by allowing clients to access their data in a more flexible and integrated way. These simplified data exchanges are reducing complexity and improving the client experience. For example, one of our largest clients now publishes NAV prices directly onto their website, securely pulling data directly from our data lake.
The second area of focus is data as a new service: RBC and other custodians are providing data platforms to support asset managers. Clients leverage their asset servicers’ technological tools and talent to accelerate their own strategies. The advent of data lakes and widespread adoption of the cloud are creating a digital eco-system where data can be put in an environment where it is shared and blended securely. This provides clients with a platform to dig into analytics, as well as access to our talent.
The resulting client insights should be leveraged to inform and shape new data services. Currently we are talking to our clients about the potential of using alternative data sources, such as social media or news feeds, to gain insights above and beyond what can be found through traditional market data systems. Further, we as custodians have significant data assets, many of which are of interest to our clients.
The third area of focus is improving the client experience. It is vital to not just talk about technology, but to demonstrate improvements in service levels, creativity and use of data to provide new value to clients, all enabled by technology.
For example, there are several practical ways data services can help clients immediately. Data programs can help investment teams make better informed investment decisions by identifying trends and exceptions. Smart use of data can also better support the management of distribution channels, and improve client services, effectively incorporating data and technology to improve the overall digital experience. Data can also help asset managers oversee complex operations and enhance risk management to more effectively comply with regulatory demands.
Ultimately, new technologies such as AI, machine learning, robotics, and data, analytics are driving the emergence of radically different business models. When I first used Amazon, I was blown away by the customer experience of buying something online, paying for it and having it delivered to my home or desk. Even when I had to return something, I clicked a button, printed a label and a courier picked it up. The data that is collected across that customer journey continues to drive innovation at Amazon, and custodians have the same opportunities to use insights to enhance our service levels and develop our products.
I think that the question going forward is the extent to which advances in data and technology can transform business models and innovate products for the benefit of end investors. Will we see the same level of disruption as we have in retail banking which has ultimately improved the customer experience, making it easier to move money, save and manage life events?