The role of data in financial services
Today’s networked world is creating incredible amounts of data at an ever-increasing rate. The challenge for the Financial Services industry is in how they can unlock the potential in the data, making use of insight rather than intuition in decision making, in order to reduce costs and drive revenue generation.
Leading financial service institutions are already exploring new ways to develop insights across customers and markets, seeking an information advantage from data that is increasingly easier to access, manage and understand.
While the industry is pioneering in technology, CIOs in financial services are still under immense pressure to deliver more business value at reduced costs. Through the measures they take, the CIO must better serve the business with high performance, high availability and highly innovative technologies that reduce costs while ensuring data is served at industry defining levels of performance and resiliency.
What technology is needed?
In recent years we’ve seen the financial services sector embracing digitisation wholeheartedly. Banking apps, once feared, are becoming a daily norm, and high-frequency trading is disrupting global investment markets. In the coming years we’ll see further game-changing technologies radically transform how transactions are made.
Data, and its application, is driving innovation across the sector, permeating areas such as trading, banking, and insurance, creating a pivotal advantage for CIOs that embrace its potential.
In the past, such businesses analysed historic data, which is structured data looking at historic results. Now the world is instant – if data is a day or an hour old, it could already be out of date. We’re looking for instant data, real-time analytics and technology that can analyse both structured and unstructured data. It’s a completely different world from the data warehouses and analytical tools of old.
It means much wider datasets, and the need for huge amounts of data picked up from different sources. Much of it is diverse and unstructured, which means the technology landscape needed to make the most of it is different – many businesses need to rethink their tech strategies.
Any technology that a financial organisation uses must offer an agile way to analyse big datasets, rather than subsets of the data. And it needs to allow data scientists to draw this information out without having to be technical experts.
Infrastructure serves as the foundation of innovation. While traditional models are expensive to executive and pose a risk to business continuity, greater adoption of cloud-based models is helping CIOs to keep their tech investments up to date with predictable costs and the flexibility to adapt to changing business needs.
The growth of hybrid cloud allows for real-time execution of business critical activities such as fraud detection, instant lending decisions, extensive risk calculations and hyper personalisation that makes data valuable once more.
In the world of enterprise storage, traditionally a large cost burden for businesses in investment, maintenance and periodic upgrades, the cost model for flash storage versus other media has changed significantly. Costs are declining while performance increases. Indeed, in its “Solid-State Array TCO Reality Check”, Gartner calculated that it now takes just 5.4 months on average to recover investments made in solid-state arrays.
As cloud increasingly pervades the storage industry, the long term potential for cost savings and business enhancement is massive.
Is the financial services industry tech ready?
The financial services industry is shifting – there are early adopters and those that are agile, such as hedge fund companies, while there are larger banks that are finding it hard to change their technology landscape because of legacy systems.
Banks may have the money to build vigorous processes in adopting new technology, but often find it hard to leverage capabilities available in the market due to being a big and cumbersome size. They need for example, to deal with applications that were maybe written many years ago, making it hard for them to transform at the speeds that they want.
But change they must, because competitors will, while new companies will enter the same market looking for a piece of the action. What banks in particularly have in their favour are barriers of entry, such as compliance rules. But there is still going to be disruption in this market around the ability to offer better services.
The ability of the CIO to invest in a simple, scalable, high-performance data centre environment is one of the most powerful strategic assets any firm can possess. It frees the ability to drive innovation across the business, especially when it comes with a cost model that allows CIOs to invert storage spend.
The disruption of data is both a risk and opportunity to the industry, and the financial companies that drive value from their data platform will be the ones who win out.