Insights from Royal London Asset Management, Legal & General Investment Management: The FIMA Benchmarking Report

In our annual FIMA Benchmarking Report, produced by WBR Insights in collaboration with Cognaize and Informatica and featuring insights from Royal London Asset Management and Legal & General Investment Management, we surveyed 100 industry leaders to find out how CDOs are combatting the biggest challenges facing the industry, and the innovative solutions being brought to the table.

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The FIMA Benchmarking Report unveils a significant shift in the financial data industry: a surge in cloud adoption. A staggering 74% of surveyed firms utilise cloud-based systems, with 38% reporting that half or more of their business systems already reside in the cloud. This trend is further emphasised by the industry's investment priorities, which align with cloud technologies. Financial data leaders are prioritising investment in both Software-as-a-Service (SaaS) solutions and core transactional systems, highlighting the value they place on cloud-based systems. Additionally, the report finds that companies are actively merging modern data platforms with established cloud providers like Amazon Web Services and Google Cloud.

However, the report also identifies challenges firms face during this cloud migration. Ensuring data integrity and clear audit trails remains a top concern, with a staggering 83% of respondents struggling to track data lineage within cloud systems. Furthermore, integrating existing systems with the cloud proves challenging for 76% of respondents, creating roadblocks in the transition process. Finally, keeping pace with ever-evolving regulations presents another significant obstacle for firms moving to the cloud. These findings paint a picture of an industry actively embracing the cloud, while acknowledging the inherent challenges of such a significant shift. As financial data leaders navigate these hurdles, ensuring data integrity, seamless integration, and regulatory compliance will be crucial for a successful cloud migration.

The FIMA Benchmarking Report explores the evolving role of data leaders in environmental, social and corporate governance (ESG) initiatives. Interestingly, the report reveals that internal stakeholder satisfaction is not the primary motivator for ESG efforts. Instead, compliance is the key driver, with a massive 63% of respondents citing regulations as their main focus. Additionally, a strong desire for accurate and reliable ESG data and scores is another significant factor.

Automation emerges as a critical strategy for achieving ESG goals. Notably, many organisations are developing their own automation technologies specifically for ESG data collection and processing. Some firms even have dedicated specialist teams handling this task. The fragmented nature of the ESG data vendor landscape and the lack of standardisation are likely contributing factors. Currently, banks and asset managers are left to determine the quality of the data they purchase, a situation that may improve in the future.

Despite these challenges, the report paints a positive outlook for the future of ESG data collection. Only 2% of respondents reported a decline in their ability to collect data. In fact, a combined 64% indicated improvement, with 17% experiencing significant improvement and 47% reporting a slight improvement within their organisations.

The FIMA report also reveals a rapid adoption of automation in data analytics. With 24% of respondents already integrated automation, and only 1% yet to begin, the industry acknowledges its potential. However, challenges remain. The majority of respondents are mid-way through implementation, facing hurdles like high costs, clear road map, sufficient resources. Regulations and finding suitable third-party providers add to the complexity. In response, many organizations are turning to AI, which offers process and support huge volumes of data, promising to enhance results and decision-making.

Our research into ESG provides great encouragement as policies appear to be embedded into both buy-side and sell-side firms. Analysing ESG data has improved slightly or significantly for the vast majority of our respondents and decisions being made at the C-suite level appear to be filtering through to data teams. Regulation remains the driving force for this, and many organisations are already realising their corporate visions.

Elsewhere, AI has the potential to revolutionise data analytics. We are already seeing a movement towards automated data analytics, and as AI and machine learning become more sophisticated, we are likely to see more and more firms adopting an automated approach. As it stands, costs are proving prohibitive for many, but that should change in the future as it becomes absolutely necessary to invest in these areas.

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