FIMA 2008 Speaker Q&A: Keith Hale, Executive Vice President of Global Sales, Netik

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What do the FIMA events represent to the data management community – why do people choose to attend?

FIMA is recognised as one of the leading forums for reference and market data in the financial services industry. As such it provides business practitioners, data vendors, service providers and software vendors a good forum to exchange information, share market experiences and formulate best practices.

How have current market events impacted the data management community? Have data management projects suffered as a result of IT budget cutting?

Paradoxically, current market conditions are bringing opportunities to the table. Improved risk management, such as accurate exposure information on legal entities, sectors, and asset classes, has become even more important in the current market.

This type of reporting cannot be achieved without accurate and consistent reference and market data, and flexible reporting capabilities. Also in a volatile market, more control is required, and ideally quicker turnaround times, particularly in the counterparty information, since this information often needs to be updated at very short notice. In the medium term, there will be further consolidation as a result of mergers and acquisition.

In addition, government intervention will result in significant additional regulation – all of which will translate into urgent needs for transparency. Firms will have to spend (even savagely reduced) IT budgets on achieving this - if their business is to survive. The feedback from Netik’s clients is that budgets for 2009 have been reduced by between 20% and 60% of 2008 levels.

What lessons have been learned in the field of data management since FIMA 2007 in London?

We ignore the identification and value of real, tangible underlying assets at our peril.

What are the likely hot topics for this year’s event in your opinion?

The impact of current market conditions on operating models – more centralisation of operational staff, and technology platforms. The impact of funding data management projects in 2009 and beyond. How to achieve more with less, due to budget constraints? How to deal with the inevitable increased in regulation? Will the regulation improve the current operating model? How to deal with the impact of merger and acquisitions from a data perspective?

How has the increased regulatory focus on areas such as counterparty risk and fair value accounting impacted the data management industry?

The old adage of ‘rubbish in results in rubbish out’, means that without accurate and consistent data, such as legal entity information and pricing, the resultant assessments of counterparty risk and fair value reporting will be inaccurate. Therefore, continued focus on data management is a key success factor in enabling firms to meet the upcoming regulatory changes.

In what ways could the providers of data and data management technology better support financial institutions in their data management goals?

As a software and service provider, the feedback from our clients is that there has to be a strong return of the business case driven appraisal for actions that change a firm’s technology and/or operations model. Indeed, Netik’s own sales process delivers an easily quantifiable cost saving proposition that makes our products and services compelling.

As a result, Netik is seeing managed services such as Netik Global Securities Master, our reference data cleansing and distribution service, becoming more popular. The key here is the end to end nature of the solution where the service includes operational staff, a common processing model, as well as an efficient technology platform. This delivers huge economies of scale, which results in significant cost savings compared to a conventional software only solution.

What are the new challenges facing the industry in the data management space and how can these be overcome?

The impact of ‘doing more with less’ (due to budget constraints), increased ‘intervention’ and regulation plus the inevitable industry consolidation are all front of mind in the current markets. There is significant evidence that firms are responding to the challenge to their own business models by rushing to convert as much ‘fixed’ cost to a variable expense base. This translates to a rush to outsource operations processes, such as reference data management, where there is a proven track record of success demonstrable by the vendor.