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

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 report1, “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.

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

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