The Data Divide: Institutional Investors Split Between Leaders and Laggards on Turning Big Data to Smart Data

  The Data Divide: Institutional Investors Split Between Leaders and Laggards
  on Turning Big Data to Smart Data

State Street Study Outlines the Five Steps Firms Can Take to Turn Volume into
Value

Business Wire

BOSTON -- November 12, 2013

State Street Global Exchange released today the following insights about the
future of data and the institutional investment industry, which can also be
found in a new report^1, “Leader or Laggard: How Data Drives Competitive
Advantage in the Investment Community.” The study, conducted in collaboration
with the Economist Intelligence Unit (EIU), surveyed more than 400
institutional investors globally and revealed an industry that is divided
between “data leaders” and “data laggards.” The former are companies that
harness data and analytics for competitive advantage and the latter still
struggle to manage and exploit the full potential of their data.

The most pressing challenges that emerged as key concerns for the industry
center on the volume, velocity and variety of data. Respondents noted
challenges including the accuracy of data (37 percent), followed closely by
the lack of integration between different data sources and types, and
timeliness of data. Although two-thirds of executives agree that leading-edge
data and analytics capabilities will be among their most important competitive
advantages in the future, only 29 percent strongly agree that their firms are
already gaining a competitive advantage from their data today. 22 percent have
a high degree of confidence in their ability to optimize electronic trading
strategies and 22 percent think their benchmark data is a significant
strength.

“The pace and volume of change in the financial markets are pushing
institutional investors to become more nimble and wield data strategically,”
said Jeff Conway, executive vice president and head of State Street Global
Exchange. “Data without the ability to deploy it to solve a problem is just
noise. As investment opportunities are increasingly harder to identify and
more complex to execute, firms who can prioritize their approach to data
management will emerge as leaders.”

Data leaders are better equipped to manage these challenges and convert big
data to smart data. They excel at extracting insight, managing risk and
performance and trading electronically.

According to the State Street Study:

  *Seventy percent of data leaders are confident they can generate
    forward-looking insights from their data, compared to 43 percent of
    laggards;
  *Seventy-two percent are confident about integrating performance and risk
    analytics, compared to only half of laggards;
  *Sixty-eight percent are very confident about being able to conduct
    scenario and stress testing investment portfolios, versus only 38 percent
    of data laggards;
  *Ninety-two percent of leaders believe their investments in data and
    analytics are keeping pace with the growth of their business, compared to
    only half of laggards;
  *Leaders are investing in smarter, faster investment decisions. Over the
    next three years, 89 percent plan to raise their investment in order
    management and execution management systems, 77 percent plan to invest
    more in portfolio modeling and optimization systems, 70 percent say they
    plan to invest further in benchmark data and 64 percent expect to increase
    their investment in risk analytics.

What are the five steps necessary to becoming a data leader?

1) Improving risk tools with multi-asset class capabilities

2) Developing better tools to manage regulation in multiple jurisdictions

3) Improving the ability to manage and extract insight from multiple data
sources

4) Optimizing electronic trading platforms

5) Developing a scalable data architecture that will grow with your business

“The capabilities and strategies that firms put in place today will lead to
data systems that need to serve the business for many years to come and
getting these decisions right is critical,” continued Conway. “Becoming a data
leader isn’t easy and there is no room for complacency. Harnessing the value
of big data isn’t just about investing in technology, it’s about having the
right teams and partners in place to turn volume into value.”

State Street Global Exchange combines capabilities in research and advisory,
portfolio performance and risk analytics, electronic trading and clearing,
information and data management, along with new innovations to help asset
owners and managers gain new insights and execute investment decisions
efficiently.

For further information on the study and to view the executive summary, please
click here. For special materials and other information, follow State Street
on Twitter @State Street.

About State Street Corporation

State Street Corporation (NYSE: STT) is one of the world's leading providers
of financial services to institutional investors including investment
servicing, investment management and investment research and trading. With $26
trillion in assets under custody and administration and $2.2 trillion in
assets under management* at September 30, 2013, State Street operates in more
than 100 geographic markets worldwide, including the U.S., Canada, Europe, the
Middle East and Asia. For more information, visit State Street’s web site at
www.statestreet.com.

*This AUM includes the assets of the SPDR Gold Trust (approx. $39 billion as
of September 30, 2013), for which State Street Global Markets, LLC, an
affiliate of State Street Global Advisors, serves as the marketing agent.

^1State Street commissioned the Economist Intelligence Unit to conduct a
survey of more than 400 financial services executives representing a
cross-section of the investment industry, with a roughly equal balance between
asset owners and asset managers. Respondents were globally distributed, with
roughly one-third based in North America, one-third in Asia Pacific and
one-third in Europe. To round out our report, the survey results were
supported by in-depth interviews with industry executives conducted by
Longitude Research.

CORP-0899

Contact:

State Street Corporation
Anne McNally, +1 617 664 8576
aemcnally@statestreet.com
@StateStreet