Maximizing revenue through enhanced data governance strategies

Vendor data plays a critical role for many financial institutions, helping them gain greater visibility and insights into customer needs, enabling them to both manage risk and create innovative, more targeted products and services. In recent years, leading asset managers have increasingly leveraged data obtained from vendors to adopt aggressive market data strategies, introduce new initiatives and improve profitability.

But this reliance on market data also brings significant challenges, particularly for the teams responsible for managing these assets. At some organizations, employees share data within teams during strategic initiatives and projects. While this is acceptable in certain situations, eventually organizations need to report vendor data usage and how many people have access to the same license or face potential fines. Unfortunately, this often becomes an afterthought in the rush to access data for a project.

This often forces asset managers for financial services firms to contend with a range of challenges, including:

• Limited oversight and transparency of vendor data acquisition, distribution and usage
  
• Disconnected legacy market data management systems
• Outdated manual processes for registering market data transmissions and feeds to business units and consumers
• Inadequate capabilities for tracking and reporting on existing licenses

These factors combine to result in insufficient controls over market data, leading to redundant licensing costs, further inhibiting the ability to switch vendors in the future. This also restricts business capabilities for reporting, governance, usage tracking and transparency, often resulting in additional manual work.

These business and technical challenges ultimately limited the team’s ability to control and track third-party data costs that rose by approximately 10% over the past year, resulting in millions overspent toward market data expenses.

When one major financial services organization sought to bring this under control, they selected the EY Wealth and Asset Management Technology Consulting and Data and Analytics team to help them build a new vendor data platform registry that would:

• Enforce accountability. Allow permissions based on contractual (information barrier) and disclosure considerations.
• Provide traceability. Integrate registry with file activity from drop zones, shares, application programming interfaces (APIs), etc., and document business use cases.
• Facilitate tracking. Provide reporting and visualization capabilities to support analytics required to manage, monitor and drive insights into data consumption and usage.

Adopting a phased approach at the start of the engagement, EY professionals leveraged the EY datalink code to develop a more clearly defined vendor data registry platform. Working closely with the client’s market data team, the EY team helped build an inventory of all data (external and internal) that would improve the client’s ability to track, monitor and govern data usage.

As part of phase 1, the EY team performed a thorough gap analysis and current state assessment of all client artifacts and set out to create several key deliverables:

• Designed and created a future state data model for vendor registry and associated metadata dictionary, extending extended across the client’s market data processes
  
• Developed functional and UI requirements, persona definitions and current state flows
• Deployed a holistic architecture and implementation approach across business, applications, integration, infrastructure and data architecture
• Established a high-level web-based UI wireframe in collaboration with the India Global Delivery Services team to support the new data registry
• Documented user stories for the registry’s reporting and analytics solution
• Advanced scenario-based user journeys and mapping to demonstrate real value from the functionalities that would meet strategic business objectives
• Designed an agile and milestone-based implementation roadmap, proposing high-level estimation models for integrated roadmap

Based on this work, the EY team developed a solid prototype of the registry platform in just eight weeks.

As part of phase 2, the EY team then moved forward with a platform modernization approach, using cloud services to navigate the client’s technology landscape and architecture, delivering a modern, cloud-based customized solution that integrated with the existing ecosystem to manage market data. This phase focused on implementation against the defined roadmap and the design and development of a business-led technology solution through an iterative two-week, agile-based iterative sprint process to define and achieve objectives. This approach helped the team develop front-end UI and back-end functionality that would allow the business to manage and register feeds, which could be integrated with firmwide APIs for enhanced connectivity.

From the beginning of the engagement, the EY team knew the client wanted to achieve a broader strategic goal of leveraging the registry platform and drive three main objectives: 1) enable aggressive vendor negotiations, 2) optimize market data spend, 3) allow for nimble vendor data switches for their processes and 4) enhance market data governance practices.

With a clear long-term view of the client’s strategy, the EY team developed an aggressive methodology to build the platform over a 12-month period. This registry implementation approach incorporated:

• A consolidated inventory that could be effectively managed and fully understood, enhancing the ability of the business to manage and store information
• Increased governance and oversight into common data acquisition patterns, consumption, and distribution of data
• End-to-end transparency into file lineage to allow for aggressive vendor negotiations
• Better controls and end-user compliance, lowering licensing costs
• Improved inventory data quality and support robust analytics

The successful implementation of the vendor registry platform enabled the client to register and provision a total of 22,000 feeds, mapping 127 services across 97 vendors (including 95 third parties).

The success of phase 2 sets the stage for phase 3, which aims to implement comprehensive reporting, analytics, governance and a feed lineage capability for a 360-degree view of market data consumption. This phase will also help the client identify opportunities to optimize cost containment, increase vendor flexibility and accelerate the buildout of vendor switching enablers. This will allow the client to take a more aggressive stance in negotiations and then execute on those switches, reducing the market data spend for the client. This opportunity is also connected to the build of a unified acquisition platform developed within the new data acquisition and analytics framework for the business, which will simplify vendor onboarding and vendor switching.

As the project moves forward, the financial services organization now enjoys a comprehensive view of multiple vendor data licenses. This view enables the firm to track new licenses and to switch to new vendors that provide more timely insights into the market, significantly improving its ability to respond to market trends and positioning the firm for success. 

This article is contributed by Farida Husain, Ajay Dubey and Sandeep Kumar.