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Allvue’s Chief Product Offier, Yuriy Shterk, joined a handful of industry colleagues at the 2023 LSTA conference to discuss how “Information is Key: Transforming the Loan Market through Real-Time Digital Data.”
The panel was moderated by Ellen Hefferan, EVP Operations & Accounting, LSTA, and additionally featured Maynard Ahner, Digital Product Management Director, Wells Fargo, Rob Downs, Head of Corporate and Syndicated Lending Research and Development, Finastra, Tim Houghton, Product Strategy Director, Alter Domus, and David Kamp, Chief Technology Officer, Versana.
In a thoughtful and lively discussion, the panel touched on a variety of ways the data management processes in the loan market are ripe for modernization and at the significant long-term advantages that uniform, streamlined data workflows could provide.
Below are a few of our key takeaways from the conversation.
Early on in the panel, Maynard Ahner made an apt comparison that seemed to resonate with too many LSTA audience members: Too often, nowadays, data is like the fried food of his home state of Texas – it goes down fast and then just sits there.
The panel agreed that, collectively, the industry was now well aware of this challenge. As Shterk pointed out, this awareness had helped push for a positive trend – data management processes are moving in the right direction. Work is being done, across the space, to solve the “slow digestion” issue all too often experience.
In the end, the panel unanimously agreed, much more needed to be done. It was in fact the very reason that many of them were there that day – to continue on with that work.
Without a doubt, the largest challenge and opportunity identified was normalization. As Shterk expressed early on, how do participants in the loan market bring in the wide variety of data they need to engage with, share it between various parties and partners, in a way that alleviates rather than adding to data management workflows?
The answer, it was agreed, is normalization. The data has to be standardized across the industry. Ahner referenced similar standards in mortgages and other spaces. As David Kamp put it, vendors need to come together to create a common format to exchange data on. To be of value, it needs to be uniform and standardized across the industry.
But, of course, the devil is in the details. And, clearly, reaching agreement on what constitutes the definition of data will be a challenge. It needs to be broad enough to encompass the variety of factors referenced by the panel – lineage that can be traced, as one example – while not becoming so bogged down with custom fields as to be useless.
The task is significant but the panel had advice: start basic. The industry needs to find a core, agreed upon definition and then begin getting data tagged up and building from there. As was repeated more than once, perfect here is unachievable so better to aim instead at starting with good.
One of the challenges, though, is there are steps within workflows that near “perfect” still needs to be maintained.
Fielding a question from the audience about whether, perhaps, AI might not be able to solve some of the logistics of data management, the panel agreed that the capabilities of AI don’t seem to be at a sufficient level of accuracy yet. It may be right most of the time, but the margin of error – and the work required to identify that margin of error – is still too significant.
Similarly, it’s clear that maintaining security and accuracy while scaling up to a normalized definition of data will be important. A variety of can and should be taken into consideration and, by many systems, already are. Kamp highlighted securing data in motion, data at rest, establishing robust authentication processes, refined permissioning, etc. But given the vital importance of these factors to all parties involved, it will be essential to maintain a high threshold for security and accuracy going forward.
The data management challenges facing the loan market are, at this point, so stark that modernization of the industry depends on it. But, similarly, the upside of doing so successfully is equally significant.
As Rob Downs put it, “If we can truly establish global data management . . . we can then create an ecosystem that depends on that data.”
“If we can truly establish global data management . . . we can then create an ecosystem that depends on that data.”
Not only would a global data framework streamline processes for the loan market, but the faster processing of data could increase liquidity in the loan market. Establishing a common way to do things would benefit vendors and managers alike.
Perhaps because of this shared upside, there was a sense of agreement amongst the panelists that normalizing loan market data would not be at the detriment to any vendor or manager and would instead be of benefit to many if not all. By working together toward this common goal, it was important to understand that their collaboration didn’t put them under threat together, but instead helped them push the market forward.
At Allvue, we’ve long believed one of the primary challenges facing private capital managers is data management. It’s why we’ve created a single-source platform, designed specifically for the needs of private capital managers.
Learn how Allvue is helping CLO managers and loan managers streamline workflows from across the lifecycle – from portfolio management to compliance and investment accounting – via our award-winning solutions. Reach out today to learn how Allvue can help you prepare for the future of loan market data management.
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