Big data, big rewards

Big data may be the buzzword of the day, ignoring it could be a serious mistake for financial services firms as the rewards can be immense.

Big data: an overview

‘Big data’ is a term used to describe very large amounts of structured or unstructured data that can be captured, communicated, aggregated, stored, and analysed. It provides a wealth of information on various topics and is now a vital part of every industry. International Data Corporation (IDC), a market intelligence provider for the information, telecommunications and consumer technology markets, forecast that the market for big data would grow six times faster than the overall IT market this year, reaching US$16.1 billion.

Applied to the financial services industry, big data is fast becoming a real game-changer, helping enhance consumer engagement and operational performance. In a 2012 survey by IBM and the Saïd Business School at the University of Oxford entitled “Analytics: the real world use of big data,” 71 percent of banking and financial markets firms said that the use of information and analytics is creating a competitive advantage for their organisations, compared with 63 percent of cross-industry respondents. It is worth noting that this represents a 97 percent increase in two years since IBM’s 2010 New Intelligent Enterprise Global Executive Study.

“Big data is especially promising and differentiating for financial services companies. With no physical products to manufacture, data – the source of information – is one of arguably their most important assets. The business of banking and financial management is rife with transactions, conducting hundreds of millions daily, each adding another row to the industry’s immense and growing ocean of data. So the question for many of these firms remains how to harvest and leverage this information to gain a competitive advantage?” the study said.

Navigating big data

Mark Whitehorn, emeritus professor of analytics at the University of Dundee and an internationally recognised expert who specialises in the areas of data analysis, data modelling, data warehousing and business intelligence (BI) also believes big data offers great potential in the financial area but that it has to be exploited shrewdly. “Most companies in the sector aren’t properly using big data, yet there is a huge opportunity for those that do. It is a fascinating area, and the way big data can be best used – and the way in which the greatest benefit can be achieved – is by using one’s intelligence, by making certain decisions. So you don’t have to be a data scientist to make those decisions, it is more about asking the right questions, using data for the right thing, understanding how it could be helpful.”

The difficulty lies not only in how to treat such vast amounts of information, which requires vision and creativity, but using them purposefully and skillfully, as Andy Bedwell, IT Programme Director, Loyalty and Digital, at National Trust points out. “Whilst there are many people who have implemented parts of an Information Management solution, such as reporting tools, or new data feeds to existing data warehouses, there are few who have implemented an end to end solution from data source, through data integration and management, to the applications and tools to access and interpret the data. There are fewer still who have experience of the business change required to establish data governance processes and determine the skills, processes and organisation needed to exploit the data to drive business decisions and processes”.

The ultimate goal is worth the challenge: understanding customers and their needs better. This is all the more vital as financial services firms are shifting from product-centric to customer-centric institutions. Big data can help these firms understand customer preferences and habits, thus improving customer service and loyalty, as well as anticipate changing markets conditions. “There are multiple approaches,” Mark Whitehorn explained. “For instance, you could take large chunks of data and look for patterns. You might try to identify the correlations between gender, date of birth and financial products, so for instance ‘females aged 45 look for this type of product’, or ‘males above 50 look for that’. This is an area known as ‘data mining’.” However, financial services firms will have to tread very carefully. As he points out, financial services companies can indeed use big data to target individuals better, but this also raises issues of intrusion into people’s personal lives.

Shortage of big data specialists

On the recruitment front, in the race to exploit big data, a shortage of properly trained candidates means graduates and skilled workers should be welcomed with open arms by the financial industry. “There is a huge lack of skilled individuals within financial services firms to explore and use big data. The demand is such that Dundee University has recently announced an MSc in data engineering,” Mark Whitehorn said. “In order to manipulate big data you need a lot of people and many tools, such as graph databases or the ‘R’ programming language – few people understand either. Both require people to think about data in a different way – there are not enough people out there who have been playing with these.”

My colleague David Atkins, Business Director at Hays Technology, says Hays is witnessing a massive demand for experts in data analytics, big data and meta data. “Major UK retailers have been recruiting staff in this area over the past couple of years and now leading IT consultancies are in the process of creating specific client offerings in this arena. This is leading to a huge spike in demand for skilled talent in this area.”

Author

Geoff Fawcett

Director, Hays UK

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Geoff Fawcett has been in the recruitment industry for over 16 years. He is currently responsible for Hays Financial Markets, which provides an integrated recruitment solution to London based Banking & Financial Services organisations. Specialist divisions include Finance, Operations, HR, Marketing, Purchasing, Secretarial, Risk & Compliance, Front Office, Finance Technology and Executive with in excess of 100 consultants.