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Managed Services: The Next Big Thing for Buy-side Firm

Why the Managed Services Option is Attractive to Buy-side Firms

by Mark Hepsworth, CEO, Asset Control

In a recent research study commissioned by Asset Control, over half of asset managers (58%) said that recent industry regulations had resulted in their organization either investing in new technology or bringing in a third party to help meet new data management requirements.

A numerous pressures are driving buy side firms both to adopt new technology systems but also to move to an outsourced, managed services approach in order to deliver it.

Many buy side firms face a perfect storm of pressure on revenues, new competition,  regulatory requirements and the need for overdue investment in infrastructure. At the same time, they are funding projects to get more out of their data assets and help mine data sets for competitive differentiation and revenue growth.  Against this backdrop, many firms are adopting managed services to enable them to do more with less; reduce costs and facilitate faster and less expensive change.

In line with this, a third of respondents to our recent survey (33%) said that reducing the cost of change is one of the main benefits of outsourcing data management for buy-side firms. The initial costs involved in building an internal data management solution might seem attractive. However, when you factor in the effort to keep the solution up to date given rapid change they quickly mount up. Enhancing systems to keep pace with new business and regulatory requirements can be expensive and it often leads to unpredictable delays and costs later on.

Reaping the Rewards

Managed services shift the operational onus to vendors and can allow internal IT to manage more activity and complete projects faster.  As well as utilizing managed services for day to day operations and small change, a vendor is typically also able to more rapidly onboard change coming from internal and industry requirements. Fintech firms are often nimbler and will have many clients experiencing the same requirements.  Opting for managed services also allows management to spend more time thinking about strategic projects as they are not caught in the minutiae of running day to day operations and can focus on strategic direction and managing the relationship with the vendor.

Other managed services drivers include addressing business requirements for broader and richer data, cost-effectively addressing regulatory change and enhancing data management infrastructure that is often overdue new investment.

Increasing data volumes alone is a major reason for financial institutions to move to the cloud and managed services. Typically, business users are demanding more data sources and greater volumes of real-time and historical data.  Add to this the trend for increased usage of algorithms and machine learning applications and data volumes are increasing exponentially.  Many firms are also using many new sources of alternative data which provides opportunities for firms to use data to obtain additional color around investment opportunities.

Clients increased focus on improving data effectiveness has led to Asset Control’s new managed data services solution, PaSSPort, which connects data sources easily to consumers workflow. PaSSPort is a packaged offering based on AC PaSS managed services, feed integration library and industry data model. It has been created for anyone needing an easily accessible store for data from one of the enterprise providers (IHS Markit, Bloomberg, Refinitiv, Six Financial Information, WM Daten, ICE Data Services), credit rating agencies or other supported feeds. It also helps clients reduce costs by avoiding duplicate data requests.

The advent of PaSSPort is also just one other reason why managed services outsourcing makes so much sense for institutions in this area – and why, over the coming years, we are certain to see a growing number of firms opting for the approach.