, Japan

Tech-Driven Investment Strategy and Research Management Systems: Global Trends and Initiatives in Japan

By Eiichiro Yanagawa

New technologies are accelerating the modernization of investment strategies and decision-making in capital markets.

Through digitizing, reimagining, and reinventing, market player research activities are being empowered to effect change across the value chain.

Fintech Players Across the Research Value Chain
Similar to other services such as financial and IT services that have experienced the turbulent disruption that digital can bring, buy-side research units and existing players can be expected to be paying greater attention to new services and the movements of new entrants while exploring possibilities ranging from partnerships and alliances to acquisitions.

With the steady influx in fintech of service providers, investment research units that have historically been comparatively out of sight and out of mind are being thrust into the limelight and facing both opportunities and challenges.

Investment decision-making in capital markets is becoming increasingly sophisticated. At the same time, markets are also witnessing dramatic changes in how investment research information is produced, distributed, and consumed. These changes have 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 that provide structured and unstructured data in an integrated manner.

Reshaping of Research Production, Distribution, and Consumption
In fintech, the explosive surge in data, tools, and distribution methods is spurring across the value chain a rethinking and reinvention of research departments and research activities.

Asset managers are harnessing ML (machine learning) to more efficiently analyze traditional market data and alternative market data sources. In addition, new types of research aggregators are offering new content in an MiFID II-compliant environment to improve the client experience in ways that transcend merely facilitating compliance.

Research Revolution and New Technology Response
In addition, the explosion of new data and tools has made it imperative for 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. Investment firms need a system to implement, manage, deploy, and track investment decisions
made based on these new datasets.

The results of Celent's Japan market RMS survey (Capital Markets Readiness for ResearchTech 2019) show that market participants have just reached the point where they are beginning to take action. Market participants should not see the proliferation of APIs and unstructured data nor the evolution of RMS as transient in nature.

Modernization of investment strategies and decision-making should be regarded as new data and tools to use, but beyond this, they should also be perceived as means to modernize in-house core systems and data architecture.

Research Revolution and New Technology Response
RMS is poised to fundamentally reshape the investment research production, distribution, and consumption in capital markets. ResearchTech that leverages new analytics technology and unstructured data will improve investment performance and act as a lynchpin for buy-side workflow solutions that will, in turn, serve to support securities analysts, portfolio managers, and evencompliance managers/ auditors.

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