State of the Art
State Street’s Spiros Giannaros reveals how the art and science of data management come together to deliver better outcomes for investors.
“Data integrity can be more art than science.” It’s a curiously lyrical description that Spiros Giannaros, President and CEO at State Street’s investment technology firm Charles River Development, and EVP at State Street Corporation, uses to describe what some may call a prosaic concept.
After a career in financial data and analytics that has witnessed a vast digital evolution in capital markets, he certainly knows what he’s talking about when it comes to data management and the value it can yield for investors seeking higher returns.
“The thirst for data has grown exponentially,” Giannaros says. “The requirements for it are getting wider and taller, that means broader datasets, alternative data and deeper history. It’s exploded.” What is it that makes it an art as well as a science? With the many and varied profiles involved in the investment process, including portfolio managers, traders and compliance officers, there are just as many requirements and required outcomes from the data available in the course of the investment process. It’s a question of managing the many different versions of human expectations, along with the data itself.
Describing himself as “a bit of a boomerang”, Giannaros has seen the appetite for data grow over the years from his time as MD of the Americas at Charles River, to when he was with multisector information provider IHS Markit, and then on his return to Charles River as President when the firm was acquired by financial services firm State Street in 2018.
A platform for growth
With 25 years of experience in asset intelligence and enabling his clients to make the most informed investment decisions possible, Giannaros says that timing is paramount when it comes to exploring and making use of expanding datasets most effectively. A successful strategy depends on looking at volumes of data organised in ‘time series’ that can reveal crucial patterns and trends which influence investment.
“I think about temporal data being stored in terms of minutes, days, years and decades supporting a trading or investment strategy,” he explains. “So if it is minutes or seconds, it's a trading strategy. If it's days, years or decades, it's usually an investment strategy.”
However, onboarding the breadth of structured and unstructured data types and the volume of new datasets, puts a significant strain on clients’ data platforms. “You're really testing maturity and scalability here,” he adds.
This has led to the need for financial services firms to implement new data management solutions, build data lakes and determine which service providers can accelerate their desired outcome – trusted data to make informed decisions.
This data challenge, combined with systems and operations fragmentation, is what led to the creation of State Street AlphaSM, an integrated investment management platform that combines technology and services to support investment products and business lines in one place across the front, middle and back office. Together with State Street’s middle and back office capabilities, Charles River’s cloud-based front-office software forms the foundation of the platform.
The value proposition in this approach means that rather than using resources on data and integration, investment managers can focus on product innovation, distribution and servicing customers – all of which helps give them a crucial competitive edge.
“Everything that we do on the Alpha platform is dependent upon data. We're either consuming data to power up the platform, or we're curating it to help create the best version of it for our customers. We're producing transactions, we’re producing analytics, and ultimately, our customers need that data for other parts of the organisation.”
Next-generation data warehousing solutions such as the State Street Alpha Data Platform (ADP), powered by the US software company Snowflake’s data cloud, bring new capabilities to data distribution and make it “as frictionless as possible to provide or commingle data with other sources,” notes Giannaros.
Key to delivering this vision is partnerships, such as with global data management company Precisely and its data governance and data quality products, which “provide insight into the availability, quality and journey of the data”.
The pace of change in the financial sector, driven by digital transformation and accelerated by the Covid-19 pandemic, means that data management strategies are being prioritised by businesses more than ever before.
“The electronification of our global economy, and the application of it in everything we do, is just evolving at such a steep curve,” Giannaros explains. He adds that this convergence – along with rapid advancements in platform technology – offers opportunities for surfacing greater insight from data.
“Current events drive people to look for insights in areas they haven’t needed to in the past. Whether investment firms are analysing cargo ships stuck in port, satellite imagery of shopping mall parking lots, or consumer sentiment metrics captured on social media, the ability to leverage these new data sources is key to hedging risk and having first mover advantage on investment opportunities,” he says. “How can I get better visibility that I don't normally gain through my standard datasets? It is causing people to look a little bit broader than they typically would.”
The pandemic also prompted a big shift to working virtually. Giannaros mentions that two years ago, if you had a question about data in the office, a quick tap on the portfolio manager’s shoulder could have provided an answer. “Now everybody's sitting in this virtual world,” he says. “So it becomes more important that people have confidence in that data and have an understanding of the journey it went through before it ended up on their screen.”
Along with the vast changes experienced globally in the past two years, environmental, social and corporate governance (ESG) issues are today topping the agenda for businesses. It is a trend that is here to stay in capital markets. Interestingly, Giannaros says data integrity – information that is accurate, consistent and contextualised – has a big role to play in this area, offering the potential to provide significant asset intelligence.
“There's a proliferation of providers out there providing ESG data. But how do I quickly understand what those datasets represent?” he asks. “It’s important to know what they mean for my ESG strategy, and which ones I want to include as part of my data ecosystem.”
This is a crucial step in building the right ESG ratings for portfolios so that they fall within the compliance guidelines the business has outlined. Key providers such as State Street and platforms such as Alpha help reduce the overhead to digest and action such datasets.
Giannaros has seen the investment market evolve through a journey of digital transformation over the course of his career, but whether he is identifying trends and patterns over minutes or decades, he says that data integrity forms the foundation of informed risk and investment decisions.
“It's square one, table stakes – however you want to reference it, every decision is made on data. You want to make sure that you have the best representation and the best understanding of that data to execute effectively,” he concludes.
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The material presented is for informational purposes only. The views expressed in this material are the views of the author, and are subject to change based on market and other conditions and factors, moreover, they do not necessarily represent the official views of Charles River Development and/or State Street Corporation and its affiliates.