The majority of capital markets firms do not have big data strategies in place even though some are investing in big data for specific functional areas, says Mervyn Mooi, director at Knowledge Integration Dynamics.
Those investments to date have typically focused on revenue-generating, front office applications while the report quite rightly finds that capital markets firms should focus on retaining clients, offering support for compliance, managing enterprise risk and achieving good governance.
Aite Group conducted research into the field on behalf of Thomson Reuters to assess the implementation of big data strategy among financial services firms. The most popular uses for big data according to the report are analytics for trading, customer sentiment and quantitative research.
The goals of big data management can be distilled into three aspects: security, information management and derived value. Those goals cannot be achieved if organisations are implementing point or bubble solutions.
Managing and exploiting big data, regardless of industry, relies on information collation and harvesting. Only the relevant or pertinent information is accumulated or filtered from various sources and secured for business operations and planning. The challenge is to manage the huge volumes and secure the sourced content and models.
Exploiting and managing big data also requires performance management and value generation by identifying and applying insights to business practices. Additionally, decision-making logic must be achieved through analyses of both structured and unstructured content, for example: social analytics, such as sentiment analysis and trade trends, such as basket analysis.
However, these financial organisations operating in the capital markets arena face the same challenge many others face when it comes to employing big data: they simply don’t have the skills to be able to do so and do not have the infrastructure, or are not ready, for managing and consuming big data.
The report by Aite Group found that half of the 423 respondent firms have already invested in big data. Half already employ or will hire a data scientist within two years. And the biggest challenge they face, the report says, is that they don’t have the technical skills to develop and implement big data strategies.
Another interesting point is that there are not many use case studies or examples of similar companies conducting big data programmes with comprehensive strategies. That means capital markets financial services firms leading the way will have to pay more school fees.
More companies will increasingly invest in big data solutions and systems, that is certain, but those that do so without a comprehensive strategy that focuses on those three crucial points as mentioned: security, management and derived value, will find that they lack the speed, insights and scalability to be successful.
