Firms Show Little Interest in Third-Party Data Utilities, Survey Says

A distinct minority of firms globally are considering implementing a utility for such challenges as know-your-customer data management.

A study released in late October by Accenture and Greenwich Associates, titled "Solving the Reference Data Disconnect," canvassed 133 firms on the buy- and sell side about their reference data challenges. Just 11% said they were considering going with a third-party shared service, despite the buzz in the industry lately around utilities.

David Csiki, managing director and president of Indata, a San Diego-based buy-side software and services provider, says "skepticism" is the cause of this lack of interest. "It's like open source software. It's great to talk about and it can work in a specialized application, but the reality of it is that they probably think the shared model isn't going to happen. So they are not going to invest a lot of time in it."

That said, however, clients are looking at ways to leverage public data as an alternative to costly data from vendors, Csiki adds. 

Respondents to the study cited data quality as their most pressing concern, with 70% saying this issue clearly impacts costs.

Csiki says this ties in with what his clients are saying. "Our clients are dealing with multiple asset classes, so they have to manage six or a dozen market data providers, and the quality of that data is a massive challenge. A secondary issue is the close-ended type of systems that the data providers themselves have which are legacy-based, so it's very difficult to get data from the providers themselves and work with it effectively. These are the two key issues for our clients."

Participants highlighted three areas of costs that were of concern: internal costs (36% and 37% expect operating costs and IT costs to rise, respectively); external costs (external data licensing makes up 33% of overall reference data spend, and almost 50% expect this to rise); and infrastructure and platform costs (34% are managing multiple infrastructure platforms for reference data).

Additionally, the study notes that the "days of the five-year Enterprise Data Management overhaul program seem to be coming to an end as firms hear the war stories of others that tried this approach and failed to either complete the program or realize any benefits.

"The trend now seems to be to plan and act tactically within the guidelines of a broader, medium- to long-term strategy plan," the study says.