Asset management is one of the most data-hungry industries in the world. Money managers, advisors, consultants, and even investors have an insatiable appetite for data. And in the next five years, advancements in AI and algorithms will drive exponential growth in this demand. It represents a big opportunity for next-generation asset managers. More than one opportunity, in fact. With a focused strategy, asset managers will have the opportunity to use data to first drive innovation, turning that data into a differentiator for their business. They will also have the opportunity to engage a broader range of stakeholders, and most importantly, they will have an opportunity to use their data to grow revenue.

Data will drive product, distribution, and engagement for next-gen asset managers.

As money passes hands to a new generation of investors, relationships will be built in a different way than in the past. At the retail and intermediate levels, digital goods and services will drive brand and product engagement. More powerful tools and applications, once available only to Wall Street wonks, will be simplified, consumerized, and put into the hands of every advisor and the investors they serve. Sales teams armed with these innovative digital experiences will more effectively create relationships built on trust and motivated by transparency. Data will drive both the digital experience and the asset manager's relationship with advisors.

Data will drive both the digital experience and the asset manager’s relationship with advisors.

At the institutional level, asset managers will also compete on experience. Decision-making will shift toward digital interactions, making data-driven digital experiences foundational to white-glove services. The demand for real-time information will create a need for both better data management tools, but also more automation. Once data can be centralized and rationalized, asset managers can automate regulatory reporting while also providing richer, more insightful collateral for relationship managers.

Centralizing data creates a single source of truth for every data point leaving the firm.

But before data can be turned into a differentiating asset for the business, it must first be centralized in a single system and prepared for digital delivery. A scalable data strategy requires asset managers to create a single source of truth for every data point the firm plans to use externally. To do this, data needs to be collected from an expanding array of sources across the business. This task often takes years. Legacy systems are extremely difficult to integrate, and once integrated, are even more difficult to change. Legacy infrastructure is not a path to transformation, it’s a path to irrelevance. But discarding the legacy entirely is expensive and often impractical.

Onboarding data to a centralized system allows asset managers to move away from legacy infrastructure gradually.

Instead, asset managers should build bridges to the future with modern infrastructure that sits above the legacy and takes advantage of modern database, cloud, and API technologies to provide scalable performance and security while enabling faster time to market with innovation. The next-generation asset manager should be thinking in timescales of weeks and months not years. A centralized system built on the right foundation can enable this new reality.

Packaging data for world-class, compliant digital experiences doesn’t mean disruption.

Onboarding data to a centralized system allows asset managers to move away from legacy infrastructure gradually. With format-agnostic data ingestion, the barrier to centralization can be lowered significantly. It means any system with any export can be brought into a central clearinghouse, where rules are applied to clean, correct, and normalize the data for distribution. Instead of modifying or upgrading the legacy systems, a lightweight and low-cost data clearinghouse that sits atop the legacy infrastructure will deliver a more straightforward path to onboarding both old and new data assets.

Along with the data itself, regulatory disclosures that accompany the data should be brought into the same central system. That way, wherever the data goes, the appropriate disclosure goes with it. A single view into disclosure management across the firm will reduce the risks of redundancy, outdated information, and human error that currently threaten compliance issues across many digital assets.

Data becomes a differentiator.

The drive toward transparency in asset management represents a fundamental shift in many of the core aspects of the business. Some important infrastructure investments today will enable the next-generation asset manager to become more dynamic, transparent, and engaging in the future. A data-driven firm is going to use data as a differentiator for their brand, the foundation for new digital products and services, and the engine that drives their distribution. A lightweight, low-cost centralized data clearinghouse is the fastest path to transformation. It allows asset managers to quickly change the output, lower risk, and enable innovation, and then make decisions about what to do with the legacy.