The study was conducted in collaboration with The Economist Intelligence Unit and surveyed 400 institutional investors globally.
It revealed the industry is separated into data leaders, who exploit data and analytics for competitive advantage, and data laggards who still struggle to manage and use data to its full potential.
The research found the key concerns involving data were related to volume, velocity and variety.
Thirty-seven per cent of respondents noted the accuracy of data was a concern, followed closely by the lack of integration between data sources and types, and the timeliness of data.
While two-thirds of executives agreed leading-edge data and analytics capabilities will be one of the most important competitive advantages in the future, only 29 per cent stated their firms were already gaining a competitive advantage from their data now.
The research also found that 22 per cent have a high degree of confidence in their ability to optimise electronic trading strategies and 22 per cent think their benchmark data is a significant strength.
Executive vice president and head of State Street Global Exchange Jeff Conway said the pace and volume of change in the financial markets is pushing institutional investors to ‘become more nimble and wield data strategically”.
He said that data without the ability to use it to solve problems is just 'noise'.
“As investment opportunities are increasingly harder to identify and more complex to execute, firms who can prioritise their approach to data management will emerge as leaders,” Mr Conway said.
Data leaders were confident about generating forward-looking insights, integrating performance risk analytics and conducting scenarios and stress testing investment portfolios, according to the research. A majority of laggards, however, lacked confidence in most of these areas.
Eighty-nine per cent of leaders surveyed planned to increase investment in order management and execution management systems, 77 per cent planned to invest more in portfolio modelling and optimisation systems, and 70 per cent plan to further invest in benchmark data.
According to State Street, the steps to becoming a data leader involve improving risk tools, developing regulation management tools for multiple jurisdictions, improving the extraction of insight from multiple data sources, optimising electronic platforms and developing scalable data architecture.
“Harnessing the value of 'big data' isn’t just about investing in technology, it’s about having the right teams and partners in place to turn volume into value,” said Mr Conway.
