BOSTON--(BUSINESS WIRE)--State Street Corporation (NYSE: STT) announced today new research, which reveals that more than half (60 percent) of institutional investors surveyed plan to partly or fully outsource their data management over the next three years. Currently, 52 percent conduct all of their data management functions in house, however, by 2021, this is expected to fall to 36 percent with 15 percent aiming to fully outsource this function to an external partner.
“Explosion in data complexity has fundamentally changed the way asset owners and asset managers compete and operate,” said Subbiah Subramanian, global head of State Street Global Exchange’s data-as-a-service offering, DataGX(SM). “Today’s investment climate requires an overwhelming amount of data, and as the lines between front, middle and back office continue to blur, smarter data management is absolutely essential for effective performance and recognizing growth opportunities.”
More than half of survey respondents (57 percent) cite the driver behind this change in data management as demands from regulators. However, it also appears that data [management] is rapidly becoming increasingly important to institutional investors with almost one-third (30 percent) stating that the incorporation of new information insights or alternative data into their investment process will be one of the strongest opportunities to help increase assets for their firm over the next five years.
In addition, almost half (46 percent) of respondents believe the implementation of a better data strategy has improved the alignment of their investment and risk teams; and 22 percent believe their data and analytics capabilities have become their most important competitive advantage.
Other key findings of the State Street research include:
- 43% of institutional investors consider the lack of integration between different data sources and types as the top data management challenge
- Five years ago, 91% of respondents said they had all or most of the right talent in place to advance investment data and analytics strategy.1 Today, this figure has fallen to 60%
- Over the next five years, 43% of respondents expect to rely on external partners as their source of performance and risk analytics
- 68% of institutional investors feel comfortable storing data on the cloud
“In an environment of increasing regulatory requirements, and with low yields necessitating investors to look into alternative – and often more complex – sources of alpha, it seems clear that institutional investors will continue to prioritize data management and analytics to make better investment decisions, meet regulatory requirements, and gain competitive advantage,” continued Subramanian. “It appears the natural and most effective next stage of this technological evolution is for institutional investors to partner with data and analytics specialists, allowing them to focus on their core competencies.”
To access the full findings, click here to see State Street’s data and analytics survey.
About State Street Corporation
State Street Corporation (NYSE: STT) is one of the world's leading providers of financial services to institutional investors, including investment servicing, investment management and investment research and trading. With $33.30 trillion in assets under custody and administration and $2.70 trillion* in assets under management as of March 31, 2018, State Street operates in more than 100 geographic markets worldwide, including the US, Canada, Europe, the Middle East and Asia. For more information, visit State Street’s website at www.statestreet.com.
*Assets under management include the assets (approximately $36 billion as of March 31, 2018), for which State Street Global Advisors Funds Distributors, LLC (SSGA FD) serves as marketing agent; SSGA FD and State Street Global Advisors are affiliated.
Investing involves risk including the risk of loss of principal.
The information provided does not constitute investment advice and it should not be relied on as such. All information has been obtained from sources believed to be reliable, but its accuracy is not guaranteed. There is no representation or warranty as to the current accuracy, reliability or completeness of, nor liability for, decisions based on such information and it should not be relied on as such.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street's express written consent.
This document may contain certain statements deemed to be forward-looking statements. Please note that any such statements are not guarantees of any future performance and that actual results or developments may differ materially from those projected in the forward-looking statements.
State Street Corporation, One Lincoln Street, Boston, MA 02111-2900.
© 2018 State Street Corporation - All Rights Reserved
Expiration date: 05/31/2019
1 State Street’s 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit