DATA & ANALYTICS

Leader or Laggard: How Data Drives Competitive

Advantage in the Investment Community

Featuring highlights of the State Street 2013 Data and Analytics Survey

conducted by the Economist Intelligence Unit

DATA & ANALYTICS

2

34%

33%

33%

North America

Europe

Asia Pacific

About the Research

A global survey of more than 400 asset managers and institutional asset owners on investment data

and analytics, conducted by the Economist Intelligence Unit on behalf of State Street (August and

September 2013).

11%

18%

20%

8% 8%

16%

19%

Respondents by Region Respondents by Type

Banks

Insurers

Pension Funds

Other

Diversified Asset Managers

Traditional Asset Managers

Alternative Asset Managers

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

DATA & ANALYTICS

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Disruptive Industry Trends Require a Rethink of Data Strategies

Issues Most Likely to Drive Change in Data Strategy Over Next Three Years

33%

34%

38%

Expansion into newregions

Growing volume of tradingdata

More stringent riskmanagement standards

Asset Managers

(Top three issues cited)

Asset Owners

(Top three issues cited)

33%

35%

37%

Expansion into newasset classes

Competitive pressure

Increased demandsfrom regulators

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

More stringent risk

management standards

Growing volume of

trading data

Expansion into

new regions

Increased demands

from regulators

Competitive pressure

Expansion into

new asset classes

DATA & ANALYTICS

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The Industry is Investing Heavily to Keep Pace

11%

75%

11%

2% 1%

Significantly increased investment (>20%)

Slightly increased investment (1-20%)

Made no change

Slightly decreased investment (1-20%)

Significantly decreased investment (>20%)

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

% Change In Investment into Data and Analytics Over Past Three Years

DATA & ANALYTICS

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Investment is Targeted at Decision-Making in the Front Office

• Decision-support for the

front office becomes a

priority

• Need to move closer to

real-time information

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

How Investment Will Be Prioritized Across a Range of Data Tools

39%

43%

43%

46%

34%

24%

27%

28%

30%

53%

Slight increase Significant increase

Order Management Systems/

Execution Management Systems

Portfolio optimization

Performance analytics

Benchmark data

Risk analytics

DATA & ANALYTICS

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Data and Analytics are Now a Firm Priority for Institutional Investors …

37%

54%

8%

1%

Most important strategic priority

High strategic priority

Mid-level strategic priority

Not a strategic priority

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

Data is the Key to Addressing a Wide Range of Strategic Concerns

• Nine out of 10 institutional investors

view data and analytics as a high

strategic priority

• For 37 percent, data and analytics as

the most important strategic priority

DATA & ANALYTICS

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An Industry

Divided by Data

1. “Data Leaders” – Companies in the survey whose data and analytics are

already a source of competitive advantage

2. “Data Laggards” – Have yet to gain full benefit from their data

Data is a competitive asset … But few know how to use it

• 66 percent believe data will be a key source

of competitive advantage in the future

• 86 percent increased investment in data

infrastructure in the past three years

• Only 29 percent of firms are reaping the full

benefits from their data and analytics

capabilities today

• Our research reveals that a capability gap

is opening up between data leaders and

data laggards

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

Yet the Industry is Polarized by its Approach

DATA & ANALYTICS

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X

• More likely to get distracted by the

complexity of data management

• Less likely to feel their data capabilities are

keeping pace with the growth of their

business

• Generating forward-looking insights

from data

• Integrating risk and performance analytics

• Optimizing their electronic trading strategies

50%

30%

92%

7%

Data Leaders are Better Prepared for the Challenges Ahead

53%

50%

42%

64%

72%

70%

Leaders Laggards

% confident in capability Data leaders are more confident in ...

% agree with statement By contrast, data laggards are …

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

DATA & ANALYTICS

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63%

81%

Laggard

LeaderTools for regulatory compliance

Multi-asset class risk tools

Custom benchmarks/indices

% that view area as a strength

59%

70%

Laggard

Leader

38%

60%

Laggard

Leader

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

Data Leaders have Smarter Tools for Managing Risk, Compliance

and Performance

DATA & ANALYTICS

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42%

35%

35%

32%

30%

Lack of integrationcapabilities

Lack of responsivenessfrom client support staff

Pricing too high

Lack of timeliness inthe provision of data

Pricing too rigid

The Industry Wants Tightly Integrated Solutions…

Source: State Street 2013 Data and Analytics Survey conducted by the Economist Intelligence Unit

Main Problems With External Data

• Institutional investors often need to

integrate hundreds of external data

sources

• Data providers need to deliver an

integrated view on risk and

performance

Lack of integration capabilities

Lack of responsiveness

from client support staff

Pricing too high

Lack of timeliness in

the provision of data

Pricing too rigid

DATA & ANALYTICS

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Defining a New Service Model

Data You Can Trust Adaptable Systems Smarter Insights

Challenge • Accuracy of information is

the top data challenge

cited in the survey

• Systems must adapt to

support multiple

geographies, asset

classes and regulatory

regimes

• Only 14 percent of

firms have all of the

talent they need to

manage data

effectively

Solution • Trusted data providers

• Integrate data to achieve

“one version of the truth”

• Systems that support

global reporting

• Integrated view on risk

and performance

• New outsourcing

models focused on

insight as well as

cost

DATA & ANALYTICS

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In Summary: How to Become a Data Leader

Get Smart on Risk • The industry needs tightly-integrated solutions to manage today’s multi-

asset portfolios

Trade Better, Faster • Better, more accurate and timely data is key to making better

investment decisions and being able to act on these insights in real

time

Manage Regulation • Build systems and processes with the flexibility to meet evolving

regulatory demands across multiple jurisdictions

The Bottom Line • Firms that develop the right data tools and strategies will be rewarded

with better insights, improved performance measurement and a deeper

capacity to understand risk across their global activities

• These advantages will be the edge that defines our future industry

leaders

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