Essential to buy-side firms’ data management is having consistency, accuracy and transparency, according to Todd Moyer, President and COO at Confluence.
“I think the industry and investors want transparency. They want it to be accurate throughout the lifecycle of their operating model,” he told Traders Magazine.
Regulators have created more work in the same timeframe, and yet, expense ratios are being caught and going down within the asset management industry, Moyer said.
He said there is a reconciliation challenge in the industry and each type of reconciliation presents its own unique set of challenges due to data complexities.
Asset managers want to ensure consistency throughout the lifecycle of all of their documents, he said.
“Having a data strategy is critical for every asset and fund administrator,” he added.
“Understanding your data, being able to have not only control over the data, but consistency over the data is key,” he stressed.
Moyer said there has been a shift from public funds into private funds, and private assets are not as regulated or don’t have the infrastructure necessarily that a large public fund would have.
“I think you’ll continue to see an evolution towards the need for transparency not only in the data, but in the reporting associated with private assets. We think that will be a trend that the industry will continue to embrace,” he added.
According to Moyer, there’s still a significant amount of manual work in the industry, and there has been human error that comes along with.
Moyer has revealed that Confluence has been focusing on expanding their reach into some of the Artificial Intelligence (AI) components and in particular large language models to help drive productivity and scale to the industry.
“I see it as the next frontier of efficiency for our industry,” he said. “Our goal and our strategy around leveraging artificial intelligence is to reduce both that manual work and eliminate the human error.”
Moyer believes that AI or large language models in general will impact every industry.
“I don’t think it just relates to data or reconciliation,” he said.
“With individuals within operations doing the kind of more analytical work and less of the manual work, you’ll see productivity and scale increased drastically,” he added.
Moyer stressed that in the last six months there has been tremendous progress in the evolution of AI models.
He believes the investment management industry will see that the next frontier and efficiency come by leveraging some of these components.
“I think it’s going to be just more a matter of how to apply them, not whether you apply them,” he said. “The obvious concern is ensuring that you’re doing it in a safe and secure manner.”
He doesn’t envision data pools being made available to the industry more broadly.
He thinks it needs to be in a secure closed environment just in terms of protection and privacy. “I think security and the way you apply this will be paramount,” he said.
