Overcoming the Fund Solutions, Financial Solutions, Corporate Solutions of ESG, Cross-Border Data and Technology Integration

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The growing demand for data to measure ESG, requiring cross-border integration of technology and data in a secure environment, is beyond the capability and budgets of many fund managers. Is a single-source solutions provider the answer?

On 13 and 14 October 2020, Apex Group and Eze Castle Integration hosted a virtual summit for investment professionals, focused on innovation trends in buy-side technology and operations. On day one of the summit, our panel of experts shared their knowledge on some of the most timely issues affecting the industry, including the benefits of using a single-source services provider, cross-border connectivity, ESG and the value and security of data. Here are some of the highlights.

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Building a business based on cross-border connectivity

Driven by the rise of globalisation, and enhanced by the immediate impacts of the COVID-19 pandemic, asset managers increasingly see the need for connectivity across their business and a seamless, cross-border infrastructure that is often beyond their in-house capabilities.

Our panel discussed some of the reasons why more and more firms are choosing to consolidate their vendor relationships to facilitate this operational need. At the top of the list are technology and transparency. Peter Hughes, Apex Group CEO and Founder, said, “From an investor point of view, they’re looking for more transparency in terms of how data flows and connects up. We’re really working on making sure that the technology goes from the actual end investment seamlessly through to the investor, without any changes of systems.”  He continued, “If you can get the whole ecosystem on one technology platform, the data flows much better.”

Relationships and communication also come into play. Mikael Johnson, Senior Lead Partner of Alternative Investments at KPMG LLP, explained, “What’s interesting to me is the significance of relationships during this COVID moment, and the difficulty of making new relationships.” Rather than adding to the list of vendors that you are working with, “going with what you know and trust has been paramount in this particular environment,” he added.

Hughes listed a number of the benefits of a single-source solution: “As a service provider, the more products you can deliver to each client on a menu basis, the more connected you are to that client, the more accountable you are.” From a governance perspective, he pointed out, “you can do more thorough oversight and governance, potentially, with fewer vendors.”

Keeping pace with the accelerated growth of the ESG market

We are currently at a crucial moment in the adoption of ESG and all of our panelists agreed. “There’s an increasingly small window of opportunity for investors to genuinely show that they are progressive, innovative and forward thinking,” said Will Chignell, Chief Commercial Officer at Apex ESG Ratings & Advisory.

The panel identified several important factors causing this time pressure. “I see the regulation, particularly from the EU, strongly beginning to bite,” said Andy Pitts-Tucker, Managing Director at Apex ESG Ratings & Advisory, while Lucian Firth, Partner at Simmons & Simmons, added, 2Investor pressure, particularly from the US, has been extremely powerful.”

With many companies wanting to seize this opportunity, Pitts-Tucker suggested that, while regulation is a driving force, “in order to really differentiate yourself, it is being ahead of the pack, and it’s showing that you’re doing it for reasons over and above legislation.”

It is also about an awareness of how the ESG landscape is changing. A mistake we have seen in the past is that “often there’s perhaps slightly too much focus on the ‘E’,” said Firth. “Depending on the business you’re looking at, the ‘S’ may be far more significant from a financial perspective”’ He continued, “Where I’ve seen thinking progress quite a lot is that asset managers are a little bit more tuned into the breadth of ESG issues.”

Of course, data is one of the biggest ongoing challenges in the world of ESG. Pitts-Tucker stated that there are ‘three burning issues’ when it comes to data: “What data is needed? How can that data be collected? And how do we convert that data into positive action?” The answer, he suggested, is a “consolidated, best-in-class data set,” powering “simple-to-use, intuitive software.” From there, he explained, “we compare the data that is provided by the company with that of a number of leading global standards… we highlight gaps and make recommendations.”

Taking a data-centric approach to value and growth

Our next panel continued on the topic of data and how it can be exploited to create real value and growth for asset managers, undoubtedly one of the biggest conversations of the moment. Even “traditional asset managers are today considering switching to a data-centric entity,” pointed out Renaud Oury, Chief Data Officer at Apex Group.

Loic Dunand, Partner at PwC, explained that there are two very different approaches that a firm might take to achieve this. “Do you want to be defensive, do you want to be looking at the compliance side and GDPR? Or do you want to be more offensive? Do you want to use the data as a tool to be differentiating yourself from the market?” For those wanting to take this second, more aggressive approach, the panel discussed how this is best achieved.

The first success factor is strategy. Lawrence Brown, Partner at Simmons & Simmons, discussed some of the innovative approaches that are apparent in the asset management space. “We’re seeing the use of alternative, non-traditional data sets such as credit card data or health data even, springing up and really catching on,” he said.

Leveraging the right tools is also crucial. The rise and progress of new data management tools, Dunand said, “has brought the power of the data into the hands of the users.” He added that it is about “asking yourself questions about what you need in terms of data and finding it yourself.”

Having the right people is another component of success, and depends firstly on finding them, but then also using them to their full potential. “What we have found in some cases,” described Brown, “is that extremely talented data scientists will be hired, but then they won’t be appropriately integrated with the rest of the business.” Partnering with a trusted single-source solutions provider can help firms overcome many of these challenges.

Tackling today’s biggest investment challenges

Whether your company is seeking a single-source solution to improve cross-border connectivity, needs assistance navigating the complexities of ESG ratings and reporting, or wants to take a new approach to data-driven decision making, Apex Group can help. We offer a full range of services on a menu basis to asset managers, capital markets, corporates, private clients and family offices.

Contact us today to discuss your business needs.

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