Meeting The Big Data Challenge In Capital Markets

By Ismail Serin

Big data – its challenges and opportunities – is the story of the day. And nowhere is this more true than for firms operating in capital markets.

One of the toughest  challenges for our capital markets clients is that the volume of transactions and the available data for use in research is increasing every day. Furthermore the market environment for investment banks is both volatile and heavily regulated.

Access to the right data and the ability to analyze them in a real-time at the right time are essential for deriving the best investment decisions. Banks need to capture live market information, integrate it with their historical data and run complex data mining algorithms to predict future market behaviour.

In this blog I want to give you an overview on how better analytics can improve the quality of research and the services investment banks offer their customers.

Modelling the future

In-memory data lets investment banks work with their customers to model the future in a way that wasn’t possible in the past. Opportunities include:

  • Identifying hidden revenue opportunities within your customer base through predictive analytics
  • Retaining high-value customers with the right retention offers
  • Sales representatives presenting customers with the best next-step investment recommendations – based on powerful data mining techniques

The banks that succeed will be able to talk to their customers in a different way to gain a competitive advantage.

Front-to-back benefits

In-memory computing can enable the front office to get better pre-trade analytics faster than now without having to talk to the IT guys in the back office. This lets the research analysts model trades and talk to their clients earlier.

At the same time, the back office’s functionality improves greatly. Complexity and cost are brought down and post-trade analytics such as stress testing become more powerful.

There are many other benefits from capturing big data including superior liquidity and risk management and improved regulatory compliance.

This is all the result of having more and better data from one point of truth.

Mastering the data will be a major battleground for securities firms in the quest for competitive advantage. Big data is a big opportunity you can’t afford to ignore.

In my next blog I will write about how to handle another major challenge for investment banks – liquidity risk management. 

Ismail Serin is a Banking Consultant in the Business Transformation division of SAP focusing on analytical banking and big data solutions. This post originally appeared on Banking View and was republished with permission.