More than half of banks lack the data to support their risk management strategies, according to a study.
Four in 10 also lack the technology to turn risk data into information that drives decision-making, found the SAP-sponsored survey of risk executives from 208 retail, commercial and investment banks.
The Economist Intelligence Unit (EIU) research found that 37% of respondents cannot predict where the biggest returns will occur, making it hard to decide where to invest in risk management.
This is despite the growing volume and complexity of big data through increasing digitisation of infrastructure, business channels and regulator demands, pointed out the EIU.
But Steven Leslie, financial services analyst, said: "It is clear that today’s banks are coming up against big challenges in risk management, however there are new tools available that help aggregate, evaluate and streamline data analytics to alleviate these struggles.
"If banks can take advantage of big data-driven tools to gain insight into the business, they will begin to see a drastic improvement in risk management strategies and outcomes."
The group pointed to decreased storage costs – thanks in part to the trend of software-defined storage – and access to unstructured data as ways banks can evaluate more information than ever before.
But more than half of the respondents said they need an enterprise-wide analytics framework to understand all the contributing risks banks face.
Ross Wainwright, global head of financial services at SAP, said: "Centralised analytics will play a key role in banks’ abilities to capitalise on big data and to develop effective risk management strategies.
"Novel and diverse data sources, such as 24/7 mobile device sensor and social media analytics, are likely to gain traction as data increases in value, volume and velocity."
The news comes after analytics firm SAS found that banks are struggling with data quality, as well as using data from stress tests to drive business.
