1 northerntrust.com | © Northern Trust 2016 Changing Data Needs in Asset Management CORPORATE & INSTITUTIONAL SERVICES Prepared for the CInvO Roundtable, June 13, 2016 Paul F. Fahey Senior Vice President Insurance Solutions

2 northerntrust.com | © Northern Trust 2016 HELPING ASSET MANAGERS NAVIGATE THE DATA SEA: OVERVIEW In September 2015, Northern Trust sponsored a survey with the Economist Intelligence Unit (EIU) that explored the various challenges asset managers face in managing their data and how they are adapting strategies to ensure their company is making the most of their investments. Who participated? Size of Target Firms Global in Scope Survey and Interview Process The EIU surveyed more than 200 asset managers and insurance company executives, asking how they are dealing with increased volume of data. About half of respondents work for firms with assets under management exceeding US$5 billion. The survey was conducted online. The EIU conducted follow-up telephone interviews with approximately ten industry executives. The survey was global, with respondents evenly split between the U.S. and Europe, with about 15% from the UK.

3 northerntrust.com | © Northern Trust 2016 DATA IS CENTRAL TO SMART DECISION-MAKING AND RISK MANAGEMENT Improving investment decisions and managing and modelling risks are the top goals that asset managers set for their data strategies. Other considerations like the enhancement of reporting mechanisms and managing costs play a role as well, but are cited much less frequently. Which of the goals below, if any, are the most important in developing your company’s data strategy? % of all respondents

4 northerntrust.com | © Northern Trust 2016 … AND ASSET MANAGERS SEEK ADDITIONAL DATA SOURCES The ever-growing demand for regulatory compliance is the most frequent motivator behind investment in new data sources, followed by the need to improve customer satisfaction. What are the most frequent reasons your organization invests in new sources of data? % of all respondents

5 northerntrust.com | © Northern Trust 2016 HELPING ASSET MANAGERS NAVIGATE THE DATA SEA: KEY FINDINGS Unable to Capture Full Value of Data Obtaining Data is Not the Issue Flexible Data Strategies Produce Best Results Strong Leadership is Key to Meeting Strategic Goals Only 13% of respondents to the survey felt they capture full value from their data. Executives who say their organization captures value from data ‘entirely’ or ‘fairly well’ say twice as often as other respondents that their data strategy is entirely or mostly flexible. Nearly 30% of those surveyed felt there is so much data it is difficult to determine what is useful. Firms that establish a focused strategy under the guidance of effective leadership are most likely to meet strategic goals.

6 northerntrust.com | © Northern Trust 2016 ABILITY OF ORGANIZATIONS TO CAPTURE VALUE FROM THEIR DATA The need for a clear strategy is growing more urgent as the financial services industry grapples with cost pressures from fierce competition, increased regulation and new products and strategies. 85% of organizations capture value from their data only fairly or somewhat well 2% of organizations not capturing value at all

7 northerntrust.com | © Northern Trust 2016 TOO MUCH DATA: DIFFICULTY IN FINDING WHAT’S USEFUL Accessing data is not the issue. Nearly 30% of respondents said there is so much data it is difficult to find what is useful. Thirty-six percent said their data requires significant processing or scrubbing.. % of respondents citing each option as one of their top 3 difficulties

8 northerntrust.com | © Northern Trust 2016 FIRMS WITH FLEXIBLE DATA STRATEGIES CAPTURE MORE VALUE FROM THEIR DATA To successfully navigate the data sea, asset managers must continually modify their strategies. Executives who say their organization captures value from data “entirely” or “fairly well” say twice as often as other respondents that their data strategy is entirely or mostly flexible.

9 northerntrust.com | © Northern Trust 2016 CENTRAL LEADERSHIP IS KEY TO SUCCESSFUL DATA STRATEGY A key component of a successful data strategy is centralized decision-making led by a person or team that has a holistic view of the company’s needs and can collaborate with different levels of the organization. Nearly one in five say they have no central leader. Of those that have centralized this role, more than 60% of respondents say that setting data strategy is a C-level responsibility.

10 northerntrust.com | © Northern Trust 2016 KEY TAKEAWAYS The Data Challenge Strategy Leadership You Do Not Have to Go It Alone Effective value captured from data is poor. The data strategy leader must have a holistic view of the firm’s needs and the ability to collaborate with and influence different levels of the organization. Firms that can act quickly in developing a flexible strategy gain the greatest competitive advantage. Leveraging a service provider’s experience can help identify synergies in reporting requirements and suggest flexible methods of extracting and organizing data.

11 northerntrust.com | © Northern Trust 2016 DISCLOSURES LEGAL, INVESTMENT, AND TAX NOTICE: This information is not intended to be and should not be treated as legal advice, investment advice, or tax advice. Readers, including professionals, should under no circumstances rely upon this information as substitute for their own research or for obtaining specific legal or tax advice from their own counsel.

12 northerntrust.com | © Northern Trust 2016