Introducing the knowledge void
The financial industry is still a “people business” and whilst written research exists, the ability to do successful deals and investments, at least partly depends on whom you know. “If knowledge is a resource to drive value, then more investment firms will be looking to source knowledge via their networks and partnerships” states Gelderen and Monk.
The process of capturing knowledge in the form of written research, either internal or external, is one already well supported for investment firms by technology vendors. When it comes to managing knowledge through people and networks this is actually more difficult and problematic. Partly, this is due to lack of knowledge leadership at the top when it comes to thinking about non-written content and often so many firms retain the “expert” knowledge within self-managed and decentralised teams. These demands are higher when it relates to deal-flow and project management, typically with those firms or teams dealing with illiquid and private asset classes. Traditional expert network platforms already exist today and largely fill this gap when it comes to external resources only.
Even if we are able to solve for the structural issues of knowledge management, there are still the practical considerations of implementation. The taxonomy, namely classification and coding of content needs to be put in place. It is all too easy to adopt general industry sector classifications as many systems do, but this misses the reality of complex deal and project work which has a thematic investment strategy. User driven tagging of content also misses the mark relying on hashtags or folders that are quickly out of date and not used consistently within an organisation.
Therefore, capturing and connecting this knowledge successfully is the next hurdle, with the use of knowledge graphs leveraging artificial intelligence only now starting to make their way into mainstream financial vendor applications. As with any process, firms need to make sure they meet their own compliance rules as well as regulations such as GDPR, which is a much bigger issue when sharing personal data, as opposed to written research. Firms looking to harness their own internal knowledge combined with external networks will gain an edge over others.
The drive for alpha has already long started. Those firms that are seeking to capture their knowledge, networks and “new” experts – using the latest technology to manage this are in the best place to succeed.
Author: AMAR RAJANI
Amar Rajani is Founder and Managing Director at Argella, an advisory firm specialising in FinTech with specialist knowledge in research, data and collaboration. Prior to launching Argella, Amar spent 17 years at Bloomberg LP, where he was Global Product Manager for Bloomberg’s research management business.