More than half (60%) of institutional investors intend to outsource their data management functions completely or partly over the coming three years, according to a report by State Street.
The study found 52% of investors currently carrying out data management functions in house. This figure is predicted to drop to 36% in the next three years with 15% of investors found willing to fully outsource the data management function to an external partner.
Citing the reason for the change in data management, 57% of investors revealed that it was due to regulatory demands.
According to 43% of investors, the lack of integration between different data sources and types is the biggest impediment in data management.
Also, 46% of investors said that incorporating a better data strategy has improved the alignment of their investment and risk teams.
State Street Global Exchange data-as-a-service offering DataGX global head Subbiah Subramanian said: “In an environment of increasing regulatory requirements, and with low yields necessitating investors to look into alternative – and often more complex – sources of alpha, it seems clear that institutional investors will continue to prioritise data management and analytics to make better investment decisions, meet regulatory requirements, and gain competitive advantage.
“It appears the natural and most effective next stage of this technological evolution is for institutional investors to partner with data and analytics specialists, allowing them to focus on their core competencies.”