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their data architecture , looking at how it can be structured in order to establish a golden source of data from as few places as possible . This has led to the ultimate question of : do you carry this out yourself by building internal applications and systems , or do you turn to service providers ? Evan Fire , the chief operating officer at New York-based Pzena Investment Management , recollects his firm ’ s journey to overcoming the challenges with legacy systems and creating a new data architecture . “ Pzena recently celebrated our 25-year anniversary , and with that comes our fair share of legacy technology and data from different systems ,” says Fire . “ Several years ago , we started on a data management journey where we brought in third-party consulting to help us build a solution that would lay out the plumbing to make our data more readily accessible which would eventually enable us to leverage these tools to analyse historical data . It is essential to know what your data priorities are , and then to layer tools on top of that ,” says Fire . Similarly , Allianz ’ s Pushpaharan explains the asset management giant has opted for a combination of third-party tools and proprietary solutions as part of a ‘ best-in-breed ’ model in order to achieve a scalable investment operations platform .
Data outsourcing Subsequently , decisions around technology stack and data architecture are spilling over to their custodial relationships . “ The service providers ' ability to help you consolidate the data is key . They have the breadth of capabilities to cope with scale and are likely to be global in their nature which is what the joint organisation will be looking for ,” highlights Tumilty . “ When we look at service providers , we ask ourselves how we can leverage their ecosystem in terms of the tools they are using and provide oversight for us as a client of what they do for us - such as valuations , reconciliation , trade flows – and to get a window into their world so I don ’ t have to build my own oversight systems . This all goes into the mix when assessing different service providers .” More is being asked of custodians to ensure that both they and their clients ’ interests are aligned . This means working even closer with asset managers so they are able to obtain constant access to data on a near real-time basis that can fuel investment decisions , manage risk , and operate more cost-efficiently . As a result , those providers that are evolving their business models faster than others are achieving greater success with clients . “ For our own proprietary decisions , we have relationships with two global custodians that are front and centre of our operations strategy . The reason for this is they are not just traditional global custody relationships – they are trying to do things with data and technology and outsourcing models that are more modern than the traditional versions ,” says Pzena ’ s Fire . “ As we think about our evolving operating model , it is essential for the GCs to shift their outsourcing models as well . We are seeing the providers that are modernising are experiencing greater success .” On top of this , custodians are often being required to help manage the flows of data , not just between themselves and their client , but with other service providers . This has often involved building custody-agnostic data vaults , utilising application programming interfaces ( APIs ) that can gather data from all facets of the investment lifecycle . “ Many asset managers are looking to harmonise those processes performed by multiple securities services providers – they want to benchmark them , ensure risk diversification , and have the same infrastructure between providers . This ensures a simpler and leaner operating model ,” says Sebastian Danloy , global head of asset managers and owners , securities services , HSBC . According to Danloy , securities services firms are looking to remake themselves to not only be a safekeeper of assets , but also a custodian of data . “ There is a brand-new way of looking at clients ’ operating models and how to create the right environment that maximises the use of the data they have . There has been significant investment in the underlying technology and leveraging securities services firms that have a dataas-a-service offering ,” he adds . “ Through the data-as-a-service model , the main objective is to harmonise the data and consolidate it in a way that can be used the same across the board . This means there is no need to customise the way
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