Smart data will change our world. It is a step beyond Big Data and the evolution towards intelligence. We have not been able to replace the cognitive aspect of thinking with machines yet, but we are moving in that direction. What is Big Data and more importantly, how can we understand the value of Big Data in Financial Services?
We are moving and growing at an exponential speed. We are passing through several ages and so far, Moore´s Law is applicable. In fact, 90% of the world’s data has been generated over the last two years.
The era of robotics and digital reproduction gave us a first glimpse of “light touch” human processes where a brain was no longer required to lead each step of the process of providing quality assurance. Fast forward to the paperless automation and self-service processes where data needs to meet some qualification but human interaction is not required, like in online banking where a transfer can be done without the need of a human on the other side.
Where are we now? According to Moore’s Law, we are now passing the Intelligent Age where we are asking machines to do some of the thinking and the concluding that used to be tasked by humans. This is a very fascinating time. As it continues, we may end up with a lot of the enlighten where we’ve predicted that technology would bring us closer to a better quality of life…Or will we end with Skynet (Terminator’s main antagonist)?
We can take the technology that we have today and apply it to problems that we cannot solve. This is where Big Data comes into action.
Why is big data a reality?
There are four fundamental factors that make Big Data real:
Opportunity. We often do not see that all transactions and interactions grow exponentially.
Capability. Nowadays we have technological capabilities that we never had before and this allows us to process data efficiently and rapidly in multiple structures.
Cost. All of this can be done at a fraction of what it used cost.
Market confidence. The market believes in big data. Market confidence has grown 40% every year so the market does believe in big data.
What makes Big Data different?
The way that we look at data analysis has changed. In the past, it took a lot of time to structure Data and place it into a new silo. Today, we are able to actually extract data and analyze it at the same time.
How can Banks and Financial Services start Unlocking the Value from their Data?
The approach is relatively straightforward. Nonetheless, the execution can be complex given the nature of Data underpinning every function and process. Unfortunately, to realize the benefits, there are no shortcuts.
Phase 1: Definition, Design and Governance – an agreed data strategy supported by an executive sponsored data program & operating model with mandated data responsibilities for data governance, data quality and data architecture.
Phase 2: Management, Development & Testing –decrease costs through data harmonization and reduced reconciliation iterations with an increase in control in reporting and financial modelling with quality data upon which to base sound business decisions and identify risks.
Phase 3: Analytical, Predication & Technology – harness the power of data and drive revenue generating ideas based on client or industry trading patterns, leveraged market technology to unlock value.
Banks that follow a robust and accountable data strategy from the beginning will be able to realize expected value further along the curve not only faster, but deeper. Once the foundations are in place the potential data capabilities quickly grow leaving banks with greater opportunities with assets they already own.