Data Protection Comes to the Fore

Asset managers continue to rank quality of service and cost as important factors when evaluating their service provider. But data protection and the footprint of the provider have increased in importance.

A lot can happen in two years. It is almost difficult to believe just how much the working world has changed compared with 2019, before the onset of the Covid-19 pandemic. Asset managers have had to completely change the way they operate, and that has had an impact on the demands they place on their service providers.

In a new survey Ignites conducted on behalf of BNP Paribas, we found that asset managers’ expectations of service providers have increased in certain key areas.

Protect & Secure: The Data Quotient

One of the key findings from the survey is that securing and protecting data has become a higher priority for many firms over the past two years, highlighted by 30% of respondents.

With greater adoption of remote working models, accelerated use of the cloud and the introduction of other new technologies to support remote working, the protection of client data has become a larger source of stress for asset managers of all sizes, as indicated by 57% of survey respondents.  As a result, an increased focus on data protection and cybersecurity is likely to continue, ranking third in order of importance when evaluating or selecting a service provider, behind quality and cost.

The demand for better data management also continues to be an area of opportunity for service providers.

Our ability to deliver timely, meaningful information is critical in helping our clients leverage data as a strategic asset and enabling an investment manager to successfully accomplish their strategic goals,

says Jeffrey Zoller, Director, US Fund Services at BNP Paribas

“ESG is a good example,” he adds. “European disclosure regulations are taking shape and the US is about to follow. Our Securities Services teams are supporting investment managers in meeting their disclosure requirements, but we’re also facilitating access to a broad range of ESG data and analytics that can be incorporated into their investment decision-making and risk processes.”

Size seems to play an important role in defining specific needs. Larger asset managers were more likely to be focused on managing the growing volume of data and the ability to consume and rationalize it from multiple sources. Smaller asset managers, meanwhile, highlight data architecture and delivering data and insights as aspects of their data management strategy that require focus.

The Importance of a Global Presence

When evaluating or selecting a service provider, quality and cost remain the two most highly ranked importance factors in our survey results. Cost was disproportionately more important to asset manager respondents with AUMs between $15bn and $100bn.

Among asset managers with AUMs below $15bn, ‘global footprint/access’ scored high when compared with responses from larger asset managers.

The global footprint of a service provider is an important consideration for asset managers. As the Covid-19 pandemic taught us, we live in an increasingly globalized world where the experience of different markets can help asset managers not only overcome challenging conditions, but thrive.

“It’s a small world,” says Jeffrey Baccash, head of global ETF solutions at BNP Paribas. “No matter where you are, nothing is completely isolated. You need to take that local market expertise and then apply it in a way that can be scaled appropriately.

“We believe this is an opportunity for service providers to rise to the challenge and meet the changing needs of asset managers.”

*Ignites, a Financial Times service, in partnership with BNP Paribas, conducted a survey in Dec 2021 of readers who are involved in operations, work with key service providers or oversee those who do to participate. 267 valid responses were received to show this snapshot of how the industry has changed.