In a blog post on SAS Voices, I read an interesting nugget, “Starting in 2007, according to IDC, the amount of data captured and replicated worldwide outgrew our total available storage capacity. Total data captured that year equaled 281 exabytes and storage capacity equaled 264 exabytes. These numbers – and that gap – have been growing exponentially ever since.” How are financial services firms handling the big data problem?
Recently, the Economist Intelligence Unit, on behalf of SAS, conducted a global survey of 586 senior executives to look at the state of big data and the organizational characteristics of companies that are adept at extracting value from data. Here are some of the key findings:
Strong linkage between effective data management strategy and financial performance. Companies that use data most effectively – defined as strategic data managers – stand out from the rest. Fifty-three percent of respondents in this group say their organizations achieve higher financial performance than their peers, compared with 36 percent overall.
Extracting value from big data still elusive for many organizations. Most companies have abundant and readily available data – but not well used data. Nearly one in four respondents said the vast majority of its company’s data are untapped. Another 53 percent say they use only half of their data; yet 73 percent say that data collection has increased in the last year.
Many companies struggle with the most basic aspects of data management. Nearly one-third of respondents admit to insufficient data governance practices, and many struggle to deliver important data to the right people within an acceptable timeframe.
ABN AMRO: On the leading edge of data management
Banks are traditionally considered the most advanced in data management. Highly transactional and digitally advanced, some financial services companies are difficult to distinguish from IT firms. They invest heavily in data infrastructure, as well as in the skills needed to analyze and interpret digital information. “Analyzing financial data is the starting point of any financial institution,” says Paul Scholten, chief operating officer (COO) of ABN AMRO’s retail and private banking business.
Mr Scholten says that ABN AMRO has done most of the foundational work that other companies struggle with in these early days of big data. It has clean, complete financial data on both its customers and their internal operations. ABM AMRO captures nearly everything (for regulatory purposes), but only uses the most valuable data for insight. And it actively seeks out new sources of data.
But being on the leading edge of data management is not without its challenges. Mr Scholten points to three obstacles that businesses across the financial services sector are facing. The first is privacy. “We have the data and tools that can help our customers understand their spending habits at a deep level,” he says. “We can help them analyze their investment strategies, understand their tax situation better and save money. But we run into privacy issues with these things, and we have to be careful about what belongs to us, what belongs to customers and what belongs to the government.”
Second, Mr Scholten is grappling with the company’s unstructured data. “We are used to structured, financial data,” he says. “We are not so good at the unstructured stuff.” He says the company is just beginning to understand the uses of social media, and what might be possible in terms of improving customer service.
Third, despite its data management prowess, Mr Scholten says the bank is still considering ways to combine data across functions to yield new insights. For instance, though ABN AMRO has an advanced risk analysis department, it does not cross-reference these data with marketing, regulatory or customer data sets. “We are working on that,” he says. “There is value to be had there.” In particular, Mr Scholten says that cross-referencing client complaints with operational risk might yield deeper insight into how operational problems affect customer service.
The final step to success
The report concludes that there will soon be a gap between companies that are still trying to understand the implications of big data and those that are using it to transform their business. You can read the full report: Big data: Harnessing a game changing asset.
There is also a great blog post from the Analytics 2011 conference. It was written during a high-performance analytics presentation given by Oliver Schabenberger, lead architect of SAS High Performance Analytics, and Radhika Kulkarni, Vice President of Advanced Analytics R&D at SAS. Their presentation was developed to help analysts at the conference see how high-performance analytics can help with today’s big data challenges:
- A more connected world.
- The data explosion.
- Increased problem complexity.
- Demand for real-time.
- Growing performance expectations.
- More data sources, more unstructured data, more attributes and more columns.
In the presentation, Schabenberger said, “You should not be doing less sophisticated analysis just because you have more data. If the size of the data is choking your analytics, the problem is not that you have too much data. It’s that you don’t have the right analytics environment.” Are you thinking about how you will solve these performance and efficiency issues too? Read the blog post Bring us your unsolvable problems. Post your thoughts and questions here or send me an email.