SmartStream Reports 71% Investment in Reference Data Growth

SmartStream's Insightful Findings on Reference Data Investment

SmartStream, a leader in financial Transaction Lifecycle Management (TLM) solutions, has recently shared the results of a comprehensive survey conducted in collaboration with Acuiti Management Intelligence. This insightful report, titled ‘The Future of Reference Data: From Compliance to Alpha’, emphasizes the critical role of reference data investments in the evolving financial landscape.

Survey Highlights and Key Insights

The survey, which engaged participants from diverse sectors within the derivatives market, including hedge funds, proprietary trading firms, and brokerages, outlines a significant shift in how organizations handle reference data. Over the past five years, firms have dramatically transformed their approaches, with automation leading the charge.

Key Findings from the Survey

Some notable findings from the report include:

• 71% of firms have invested in reference data over the past five years.
• 46% of respondents indicated that standardising external data poses a significant challenge.
• Automation has led to substantial reductions in manual processes, with 56% reporting notable improvements in reconciliations and trade workflows.
• 24% of firms have fully automated their reconciliation systems, indicating ongoing challenges despite technological advancements.
• AI adoption is gaining traction, with 25% of firms currently utilizing AI or machine learning for data management, and 30% planning to implement these technologies soon.

Challenges and Transformations in Data Management

Linda Coffman, EVP at SmartStream RDS, pointed out that while progress has been made in data management, fragmentation and complexity persist. Integrating data from multiple vendors and addressing the inconsistencies of external counterparties remains a challenge. However, the advent of AI is revolutionizing how reference data is applied in financial transactions, allowing firms to invest continuously rather than relying solely on one-off upgrades.

Expanding Use Cases for Reference Data

Ross Lancaster, Head of Research at Acuiti, highlighted the broadening applications of reference data that extend beyond post-trade reconciliation. In today's dynamic market, firms are increasingly using reference data to discover competitive advantages and enhance efficiency across the entire trade lifecycle. The report underlines a progressive trend towards leveraging AI and machine learning, with a quarter of firms actively engaging these technologies for improved data management.

The Future: Automation and AI Integration

As the financial sector navigates through early stages of AI adoption, the momentum for innovative reference data applications is undeniable. Although initial costs and a cautious approach are notable barriers, these challenges are expected to lessen as more firms embrace these technologies, unlocking extensive use cases and operational efficiencies.

The survey findings reflect a financial industry steadily moving towards automation and AI-driven innovations. Firms increasingly recognize the indispensable role of reference data for achieving operational excellence and minimizing risk.

About SmartStream

SmartStream is a globally recognized leader in financial transaction management solutions. The company enables organizations to enhance operational control, reduce costs, and comply effectively with regulatory requirements. By supporting customers in their digital transformations, SmartStream offers an array of solutions across the transaction lifecycle, infused with AI and machine learning technologies for deployment in cloud or managed services.

With over 2,000 clients, including the top 100 banks worldwide, SmartStream's Transaction Lifecycle Management (TLM) solutions significantly improve operational efficiency.

About Acuiti

Acuiti stands out as a management intelligence platform tailored for senior professionals in the derivatives industry. It provides high-value insights into industry performance and business operations. Acuiti's platform fosters transparency and enables senior executives to share information regarding daily operational challenges, empowering them to make informed decisions and benchmark performance effectively.

Frequently Asked Questions

What is the significance of the SmartStream report?

The report highlights the growing investments in reference data among firms and underscores the importance of automation and AI integration in financial operations.

How many firms are investing in reference data?

The survey revealed that 71% of participating firms have made investments in reference data over the past five years.

What challenges do firms face with reference data?

Standardising external data is a major challenge reported by 46% of survey respondents, along with the complexity of integrating data from various sources.

What technologies are firms adopting for data management?

25% of firms are currently utilizing AI or machine learning technologies, with another 30% indicating plans to adopt these technologies soon.

What impact does automation have on financial operations?

Automation has led to significant reductions in manual processes, improving efficiencies in reconciliations and trade workflows throughout the industry.

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