Leaving money on the table: plugging efficiency leakage in the management of investment data

Leaving money on the table: plugging efficiency leakage in the management of investment data

Earlier this year AlphaCert attended the annual Investment Operations conference, and one interesting concept being discussed was ‘efficiency leakage’, particularly in relation to operational effectiveness in the industry.

What does this mean in terms of managing investment data, and what can you do to mitigate against it?

Leakage happens when people are manually assembling data, especially when it comes into the operations team in a series of different formats – spreadsheets, emails, PDFs, etc. With the data coming from a range of different sources, it can often be challenging to tie it all together manually into one spreadsheet, while at the same time making sure it’s accurate. It’s time-consuming and not the best use of resources.

The best way to plug leakages and improve efficiency is to understand the main causes. When you have a large volume of data, combined with different levels of complexity, a variety of sources and a range of formats, that data is more likely to ‘leak’ when it comes to collating and subsequently, reporting. For example differences in identifiers provided by suppliers can make it difficult to ascertain if a certain type of financial instrument is in fact the same thing from two different suppliers.

Efficiency leakage has adverse effects on investment management businesses. The manual effort required to integrate the data can have an impact on:

  • How quickly the data is provided to downstream systems and then to the end users. If clean, verified data isn’t available to the end users, it can affect their ability to use it in investment decisions or reporting.
  • The efficiency of resources. If the integrated data has any anomalies as a result of efficiency leakages, it can tie up resources in terms of both time and systems.
  • The opportunity cost of skilled employees. If highly-paid analysts spend all of their time wrangling data rather than analysing it, they’re not being as productive as they could be and their skills aren’t being used in the best context.

Plugging efficiency leakages also requires a shift in mindset and culture. Investment managers need to invest in solutions that address leakage and free up skilled resources for higher value work. Our customers are using the AlphaCert solution to address their leakage challenges, automating processes to replace manual ones. These include:

  • Fast data upload
  • Exception-based reporting
  • Data verification and signoff capabilities that allow users to deliver timely and accurate data to end users and third party systems.

In the end, plugging efficiency leakages is about treating data as a strategic asset and investing accordingly. Data complexity and volume is not something that will go away. As the investment management industry becomes more complex, diverse and potentially fragmented, efficiency leakages are likely to increase. At AlphaCert, we recognise the growing volume and complexity of data being generated, and we understand the need for efficiency in terms of high-quality data.

If you’d like to find out more about how AlphaCert can help plug efficiency leakages in your investment data, get started with a personalised demo.