Mounting difficulties with maintaining and analysing data services to support investment management is leading an increasing number of asset owners and managers to turn to third-party sevice providers to help with their needs and cut costs. Some, such as Zurich Insurance, are looking at data-as-a-service (DaaS) to ensure they are on top of these efforts.
As asset owners and managers increasingly replace their legacy computing systems with more modern networks, some have seen the merits of outsourcing data management to a third-party service provider.
The traditional data management operating model was the enterprise data management (EDM) solution. However, many factors prompted the insurer to look for change, Ruchir Verma, head of global services for investment management at Zurich Insurance, said in a webinar focused on DaaS co-organised by AsianInvestor and SimCorp on Tuesday (October 20).
“The most important reason is that we realised we were not fully utilising the people we have to reach their full potential. We have people who know data, who understand technology; they have the industry knowledge in insurance and investment. It's a rare combination of skills that we have. [But] in the old model, we were literally spending a lot of time on data monitoring, collection and preparation,” Verma said.
“We started to think [if] we really need our people to do these activities, which could be done much better by a provider without compromising any value-add that we may have in our own company,” he added.
While adopting DaaS, he emphasised that there is a need for asset owners to have confidence in the service provider based on competencies, know-how and trust, highlighting how Covid-19 volatility had exacerbated existing data management challenges and caused problems for the institution.
As a global organisation, Zurich Insurance’s offices across different markets had to deal with operational issues caused by lockdowns and other social impacts, but the insurer has created an environment where everyone can work 100% remotely all the time. That has allowed the institution to overcome these physical and infrastructure barriers, he said.
However, the insurer still faces two main problems. One is a potentially more significant economic impact caused by Covid-19. This impact means Zurich Insurance needs to have a quicker turnaround than usual in the investment process and working remotely has made this all the more challenging, Verma said.
The second problem relates to technology. The insurer realises that it needs to accelerate both cloud and intelligence automation in the data management space to overcome the challenges that could surface during this time, he added.
Verma and other speakers in the webinar also discussed the challenges of adopting DaaS.
There is an element of know-how in the sense that teams need to research the new requirements and also understand how these must to be implemented, according to Josef Sommeregger, vice president at SimCorp. There is the complexity that comes from implementation, he said.
And this problem is more severe in smaller organisations, where there are typically fewer people. They have to multi-task, as they stay on top of everything from regulation to business changes, he said.
There is also the need to change people’s mentality inside the organisation too.
It's a transformation, not just of the processes and activities but also of the mindset, Verma said, adding that another crucial factor is management support. This opinion was echoed by EnHao Chua, head of digitalisation and data at UOB Asset Management.
Regulatory oversight has increased, and data privacy is also an issue. In terms of some of the biggest funds, cultural reluctance to change can be really challenging, Virginie O'Shea, founder of Firebrand Research added. Unfamiliarity with a model or a vendor can be a problematic issue, she said.