About a-team Marketing Services
The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

From Big Data to Big Gains – Take a Step Back

Subscribe to our newsletter

By Atul Singh, Capco
www.capco.com

While there is no argument about the potential benefits of big data, the road ahead for organisations to realise those benefits is still being paved. “Overwhelming” is the buzz word and it is not just related to the volume of the data, but also to the implementation efforts required, and the risks associated with missing the big (data) bus.

More questions than answers

For financial institutions (FIs), the post-financial crisis cost pressure adds another dimension. On the one hand is the significant benefits potential from big data (through better and faster insights, new products and services, improved customer experience, etc.). On the other hand are the additional investment and the challenges related to implementation and integration with the traditional analytics. On top of these is the still unclear return on investment (ROI), which is making it tougher for the leadership to justify the infusion of resources towards big data.

Big data is still emerging and evolving rapidly. While there is general awareness and agreement of big data and its benefits, there is not enough information or examples of successful implementation, especially in financial services. ROI estimations are unclear because it is based on assumptions that are too fluid at this stage. Equally important and uncertain are the questions related to the incremental ROI in the coming years. It is likely that in the next decade or so, when big data is established and stabilises, its incremental ROI will begin to shrink when the adoption becomes widespread.

Moreover, in a competitive world, big business opportunities tend to gravitate towards economies of scale, with consolidation in the industry and niche players evolving as large-scale providers (we can already see some trends). Shrinking incremental ROI will only hasten this process. These issues beg the question for FIs whether to go ahead with big data implementation or to wait and watch while other industries test the waters and let the technology mature before full-scale implementation. There are more questions than answers at this stage but that is not necessarily a bad thing.

Cart before the horse?

With unprecedented increase in the rate of data generation in financial services, institutions might be tempted towards what big data has to offer without first understanding what their organizational needs are. In a rush to ride the big (data) wave, it is likely that FIs focus more on the benefits of big data rather than their own current challenges (internal and external) and how it can benefit from big data. This knee-jerk reaction however, will be counterproductive and lead to unnecessary roadblocks resulting in suboptimum results.

It is therefore imperative for FIs to first understand the current state of organisational challenges and its readiness for big data implementation. Some organisations may be better suited and more ready than others to integrate Big Data with traditional analytics. This could be because of several factors, including IT infrastructure, leadership support, and workforce composition, etc. A strategic step back to first assess the organisational priorities and how to align them with big data can go a long way.

The roadmap of successful implementation of big data should start with the FIs identifying the areas that are performing at sub-optimum levels and prioritising top areas for improvements (in terms of cost-benefit analyses, profitability, mission-critical nature, and overall impact on the organisation). From these areas, identifying the ones that will benefit from improved analytics and business intelligence will result in the best candidates for big data implementation.

Having identified the right load for the cart, a well-planned implementation and deployment strategy is required to put the necessary horse power in place. This process should start with forming a core team for big data implementation with experts (in-house and external) and influential leaders from the senior management. This team should make an assessment of the required resources (human and technology) to implement big data in the identified areas of the organisational priorities. The core team must be governed by a well-defined but flexible agenda and should be responsible for gathering the appropriate resources and tool/technologies required for implementation. Budgetary allocations and targets must also be established by this team for a phased implementation of big data (including training needs). Because of the fast evolving nature of big data, the progress of the implementation efforts should be regularly and periodically assessed and a fast and lean decision-making process should be established for rapid adjustments to the implementation plan.

But the time is now

Increase in customer base for FIs has tapered off and the total customer universe has more or less stabilised in developed economies. New customers primarily come from acquisition (one bank’s gain is another’s loss). Customer expectations are at an all time high and customer loyalty is a fence sitter (switching between banks is increasingly commonplace). While big data is still evolving, the potential benefits are undeniable and can lead to significant improvements in overall customer experience. A wait-and-watch strategy for banks can be equally hurtful as a knee-jerk reaction.

Big data is changing the face of business intelligence and analytics. For FIs, there are only two options; be the change or chase the change. Some FIs will take the lead in implementing big data analytics to provide new products and improved customer experience, consequently winning over the competition and cutting on the customer base of the laggards. Early adopters can shape the changing landscape and remain ahead of the curve.

The ideal way forward for FIs to take advantage of big data is to take a step back, assess and prioritise their organisational needs, assess how big data can provide a meaningful solution, and then forge ahead with the implementation. This assessment itself is a significant effort and will require time. Some FIs have already initiated steps in this direction and with timely thought leadership, sponsorship, and action, some FIs will emerge as leaders. Big data is no more a question of “whether-or-not” to implement. Nor it is a question of “when”. It is now a question of “how” to implement. Therefore, the time is now to pave the way, push the pedal and steer in the direction where big data will bring big gains.

Subscribe to our newsletter

Related content

WEBINAR

Upcoming Webinar: Best Practices for Building High-Performance Data Infrastructures

Date: 23 June 2022 Time: 10:00am ET / 3:00pm London / 4:00pm CET Duration: 50 minutes The requirement for high-performance data systems to support trading analytics for hedge funds, high-frequency trading firms and electronic liquidity providers is well established. But the explosion in Big Data over the past several years has expanded the scope of...

BLOG

Adaptive Joins TradingTech Summit London to Discuss the Changing Reality of Technical Innovation

Adaptive, a provider of trading technology solutions based on the latest technologies and techniques, and a platinum sponsor of next week’s A-Team Group TradingTech Summit London, is pushing the boundaries to reduce the overall cost of innovation and delivery of novel capital markets products. Ahead of the event, we talked to Adaptive CEO and co-founder...

EVENT

TradingTech Insight Briefing New York

TradingTech Insight Briefing New York will explore how trading firms are innovating and leveraging technology as a differentiator in today’s cloud and digital based environment.

GUIDE

Preparing For Primetime – How to Benefit from the Global LEI

They say time flies when you’re enjoying yourself, and so it seems the industry have been having a blast with its preparations for the introduction of the global legal entity identifier (LEI) next month. But now it’s time to get serious. To date, much of the industry debate has centred on the identifier itself: its...