I recently read an interview of a hedge fund CTO on the changing face of the fund industry. Key takeaways:
1. The new role of technology teams in investment firms is to “liberate” the data so the rest of the business can apply their analytical skills
2. Tech teams need to focus on customizations that differentiate their fund and not on building generic tools from the ground up i.e. Democratisation of tech and data
3. Need for Business to work closely with tech teams to harness opportunities to support the data and research, trading, and portfolio management needs
So how can firms build a framework to ‘liberate’ the data?
– Build a cloud ‘investment’ warehouse (i.e. Snowflake/RedShift) by team(s) that includes members with proven domain expertise
– Use a cloud native Microservices architecture to move data from source systems to the warehouse using an event based framework
– A domain data model that is extensible to support growing business needs in areas of Alternative investments, Crypto , ESG, etc.
What not to do?
– A data model that is a dump from the core systems.
Long-term success is determined by how efficiently the firm can manage data growth to get ‘actionable’ insights without degrading system performance.