State Street announced new research revealing that more than half (60%) of institutional investors surveyed plan to partly or fully outsource their data management over the next three years. Currently, 52% conduct all of their data management functions in house, however, by 2021, this is expected to fall to 36% with 15% aiming to fully outsource this function to an external partner.
More than half of survey respondents (57%) 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%) 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%) of respondents believe the implementation of a better data strategy has improved the alignment of their investment and risk teams; and 22% 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. 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
To access the full findings, see State Street’s data and analytics survey.