The cost of patchwork data foundations is proving to be a heavy burden on global investment firms, threatening not just their bottom lines but also the prospects of harnessing Artificial Intelligence (AI) effectively. According to a report from GoldenSource and InvestOps Insights, 'The Basis Point Blind Spot', 98% of surveyed buy-side firms acknowledge that their current data infrastructure is undermining AI outcomes, while 55% reveal exposure to annualised risks of 0.50 basis points or more directly tied to AI and advanced analytics.
These statistics translate into substantial financial losses, with over 80% of firms attributing direct financial losses to poor or delayed data. Notably, the pressure is now being felt at the highest levels, with 44% of respondents from Portfolio Management and Executive Leadership indicating it's no longer just a technology or operations concern.
The report highlights that the issue goes beyond simple data quality; rather, it's a matter of interconnectedness and context within capital markets data. Firms struggle to link instruments, positions, counterparties, and legal entities effectively, making it challenging to establish trustworthy outcomes at scale. This fragmentation means centralising records alone is insufficient to address the core problem.
The financial impact extends beyond direct monetary losses. Inaccurate or delayed data can have far-reaching consequences across investment decisions, operational efficiency, regulatory oversight, and client trust. The study also reveals that 63% of firms believe their current data models only partially or minimally support a comprehensive portfolio view across both public and private markets.
A clear imperative emerges for the sector to address these foundational data issues. GoldenSource's CEO James Corrigan underscores the importance of proactively improving data operating models to navigate complexity and apply AI with greater confidence. The findings suggest that firms must act now to unlock the full potential of AI and mitigate ongoing financial risks.