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Modernizing Tech-Driven Investment Strategies: The Emergence of the Research Management Systems (RMS) in Japan

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24 June 2020

The re-emergence of RMS will be the nerve center for capital markets players amid post-pandemic uncertainty. Now is the time to maximize emerging technologies in investment strategies. RMS is no longer an option, but a source of competitive advantage for capital markets participants in the New Normal.

Key research questions

  • How is technology disrupting investment information strategies and decision-making?
  • What kind of disruption is technology bringing to investment information strategies and decision-making?
  • What are the impact of RMS and the modernization of investment information strategies?

Abstract

Based on an exclusive survey about ResearchTech in Japan, Celent offers a comprehensive overview of the current state of market participants and the challenges they face in the ongoing digital transformation while offering proposals related to the potential of emerging technologies, innovation, and ecosystem migration.

Investment decision-making in capital markets is becoming increasingly sophisticated. At the same time, we are also witnessing dramatic changes in how investment research information is produced, distributed, and consumed. This change has resulted in a thriving research management system (RMS) sector and market. The key players behind this are new analytics technology vendors and market data vendors who provide structured and unstructured data in an integrated manner.

Emerging technologies and application programming interfaces (APIs), and alt data—including the use of structured and unstructured data—are revolutionizing traditional investment approaches. The so-called fundamental quants approach hinges on what Celent calls the “cyborg analyst.” A cyborg analyst is an analytic approach that couples new data and tools with investment approach know-how. This approach merges big data analytics with quantitative methods. Fundamental quants analyze data, build investment models, search for patterns to support investors, and propose signals and actions to generate returns. Information gathering is enhanced through scraping social media, sentiment analysis, meteorological data, satellite imagery as well as other alt data.

Celent believes the use of new technologies and the proliferation of alternative data at financial institutions will significantly contribute to the modernization of investment information strategies and decision-making in capital markets. Besides, the explosion of new data and tools has made it imperative to buy side financial institutions to possess a system to record transactions in the front office. This is a sphere where RMS should bear the burden. The investment department needs a system to implement, manage, deploy, and track investment decisions made based on these new datasets.