SPONSORED CONTENT | There is now a common maxim that more data has been generated in the last two years than in the entirety of prior human history. Florence Fontan, Global Head of Asset Owners, and Ian Perkins, APAC Head of Asset Owners at BNP Paribas Securities Services, explain how pension funds can use this plethora of data.
There has been an astronomical surge in the volume of business data worldwide. What are the biggest data challenges for institutional investors?
FONTAN: It stands to reason that a pension fund’s key objective (paying current and future retirees) is more likely to be met if the organisation can make decisions based on the greatest amount of relevant information. In order to create full transparency when monitoring investments and liabilities, pension funds have to harmonise data into a common format, then scrub and aggregate it. This is time-consuming and challenging.
The key challenge lies in the aggregation of data, primarily because it comes from multiple sources. A custodian is able to aggregate that data and a custodian investing in the right technology now has the opportunity to become something of a ‘super custodian’, akin to a data or technology company, aggregating data from multiple managers and multiple custodians, and making this data available to clients in useable and consumable chunks.
PERKINS: Specific data and information requirements vary across asset owners and geographies based on the different regulatory requirements and objectives of a fund. For example, insurers will be seeking to optimise risk-based capital requirements and their collateral positions, whereas a defined benefit pension fund will be focused on asset and liability matching. Through the use of greater data processing power, asset owners will have faster access to the results of complex calculations, the ability to perform more predictive analysis, and improved visualisation tools for their specific data and information.
What solutions has BNP Paribas in particular developed to help service clients in this important area?
FONTAN: The investment office is a collection of data services currently being developed by BNP Paribas. It is an ecosystem of service outputs, where an institutional investor can become a data explorer by visualising and interacting with their data. It can accommodate all stakeholders – CFO, CIO and operational staff, helping them meet their daily activities and the organisation’s overarching goals.
There is now a common maxim that more data has been generated in the last two years than in the entirety of prior human history. Florence Fontan, Global Head of Asset Owners, and Ian Perkins, APAC Head of Asset Owners at BNP Paribas Securities Services, explain how pension funds can use this plethora of data.
It uses ‘smart data’ technology to combine disparate data from existing services such as custody and middle office, alongside external data sets such as market and client data. It uses both structured data, such as accounting and performance data, and non-structured data, such as social media and news feeds.
A user is alerted to critical issues but even more importantly is provided with the necessary tools to perform his or her own analysis, such as what-if simulation, asset allocation analysis, and new risk-adjusted measures comparing performance, risk, ESG and capital data in new analytical measures. For example before selecting a new manager, the smart data analysis solution can assess how the manager’s investments will impact the overall fund in terms of asset allocation, ESG scores, the risk profile, etc.
The BNP Paribas Investment Office will also allow the user to explore data through a dedicated sandbox (a user-specific virtual space for clients to experiment with their data), dynamic data visualisation, client-run application programing interfaces (APIs) and stateof-the-art reporting. All of this changes the classic asset owner user experience, making interaction with a custodian more interactive and customisable.
Data as a service will provide pension funds access to their disparate data, provide it in common formats and draw connections that previously could not readily be made. It will allow pension funds to extract greater value from the services they receive from their providers and make more informed investment decisions.