Data Scientists are the Competitive Advantage of Financial Big Wigs
By Amit Kumar Nahata
Harvard Business Review declared Data Scientists to have bagged the sexiest job of the 21st century. With financial services being so competitive, it is no surprise that their sudden appearance behind the scenes for financial big wigs reflects the fact that companies are now wrestling with information that comes in varieties and volumes never encountered before.
What role does big data or data analytics play in financial services? Data scientists turn an indecipherable lump of facts into a reliable source of resourceful insights leading to business growth. Some of the key progressions made in the financial services by using big data are as follows:
1. Trading Data
Data Analytics platforms analyse past information to understand trends, study the present impact of world events on real-time stock and predict the future for optimal results. The proof of the pudding lies in their results for companies like India Infoline, which believe that data analytics accelerate market maturity and help investors and traders achieve the right strategy.
With a growing number of banks moving to Hybrid Clouds, an increase in transaction monitoring, KYC compliance, money laundering detection, and prevention efforts, data management and business analytics take the centre stage. Additionally, the requirement for customer-centric technologies as well as other risk and compliance requirements are causing global names in the banking world, like CommonWealth Bank, to invest large amounts in data science and big data analytics.
3. Financial Advisory Services
The knowledge of predictive analytics and data science can aid in automating simple tasks that can assist in middle and back office operations such as loan underwriting, reconciliation and risk model development. In time, it could revolutionize areas like portfolio management. State Street, the financial powerhouse has committed to the upcoming blockchain technology, which is to be used for syndicated loans, securities lending and collateral management.
BlackRock Investments has used data analytics to collect and analyse data, thereby giving rise to a new kind of fundamental investing. Instead of using the standard list of restricted number of companies, the group uses big data to run detailed diagnostics on thousands of stocks around the globe. Owing to this strategy, this market-neutral fund was able to deliver returns independent of the situation in the broader market.
The insurance industry has been struggling to get a good handle on its data for decades, both on the transactional and the risk management aspects. The use of big data allows the utilization of new sources of data that extend beyond traditional sources. Data scientists can provide analysis otherwise impossible through traditional data capture and store practices. Big Data technologies can enable companies like Liberty Mutual Insurance to assess unstructured data and turn it into something useful.
The coming years will be crucial to determine the ubiquitous influence big data will have on financial firms as the use of data analytics will be explored in core areas, across a broad range of financial services.