Why should financial services care about big data?

By Phil Greenwood | 7 July 2015

Information is the oxygen of business – it is an invaluable resource that, if treated correctly can provide insight and business intelligence to drive customer engagement, productivity and competitive advantage.

Information is also a strategic asset. Treating it as such offers the opportunity for a multitude of commercial rewards, not least a strong competitive advantage; therefore it is vital for financial services to manage it effectively and efficiently for their own advantage.

Our third annual Information Risk Index with PwC found that organisations understand the value of information but are more concerned with defending it against data breaches or legal action than they are with using it to drive competitive advantage and growth. Companies acknowledge that information has helped them to improve their decision-making, understand their customers better or drive revenue, but its potential in other key areas remains under exploited. In order for businesses to best use big data this must change.

Our study, which surveyed mid-sized businesses and enterprises across Europe and North America, found just two thirds of UK financial services use information to enhance product or service innovation. Only a quarter use information to increase their speed to market, whilst one in twelve say that information has boosted product or service development cycles. When asked to rank their information management priorities, the majority of UK financial services (81 per cent) opted for avoiding a data breach and avoiding legal action, or a fine for non-compliance. Whilst the results are broad, unlocking the value of information appears to be a challenge for all.

No organisation would willingly turn down an opportunity for competitive advantage, which suggests that the problem lies in not knowing how to achieve it. It is critical that companies get to grips with big data, and adopt a responsible-yet-proactive approach to risk and value, not just to protect the business, but to let it thrive.

No two businesses or sectors can manage their information in the exact same way either. It all depends on how they use data, what they use it for and what they hope to get from it.

The key to getting it right is to put a robust, yet flexible information management framework in place, that can adapt and grow with the business’ understanding of big data within the financial services sector. This will provide a structure that the company can build upon as the full impact of big data becomes clear.

By considering the following checklist, businesses within the sector will be well placed to manage whatever comes their way and can start managing big data as a benefit.

1. Start at the end. Define the business goals and objectives and build your data strategy around them.

2. Shrink the problem: make the challenge manageable. Everything is changing so rapidly that trying to find the perfect solution that addresses every eventuality will prove impossible. Decide on the information of greatest potential or risk to your business and focus your time and resources on harnessing that.

3. Get to grips with incoming data. Prioritise the data coming in, understand what you need to keep and consider deleting or setting a time frame that data is kept before being deleted.

4. Have a plan for what’s left. Segment data by date, for example; anything older than a particular date can be archived on back-up tapes in a secure archive. Dispensing with junk mail alone could free up 30 to 40 per cent of the data space on your servers.

5. Establish company-wide scalable, big-data-resilient information management systems that will help you to channel, analyse or archive unstructured digital content such as emailed and social media.

6. Know your legal obligations. In technology, law always lags behind practise and in the big data world it is particularly important to understand how emerging data protection and privacy law affect social media, real-time consumer data and location based information.

7. Avoid analysis paralysis. Big data informs and enhances judgement and intuition, it should not replace them. Big data volumes have immense potential for improved decision-making, but can also cause delay as managers try to sift through thousands if not millions of data points in order to make a decision.

8. Opt for progress over perfection. Getting something in place is more important. Design data management policies in good faith and implement them consistently across the business. What you decide will touch everyone in the business so it is vital to get all employees on board.

9. Make it easy for all departments to see your information. People need access to data, but they want it to be painless, transparent and easy. Ensure employees know how to search for and analyse the data so they can release its value.  Integrate paper into the process by digitalising it.

10. View the data in content. Data in isolation is essentially worthless. Don’t get lost in the detail looking for patterns and trends that you lose sight of the big picture.

11. Consider your carbon footprint. Archived back-up tapes consume a fraction of the power of other leading data storage options, including spinning computer disks and ‘cloud’ storage (which in reality means storage on a permanently switched-on, artificially cooled server in a data centre off-site).

12. Know where the data is and who is and who isn’t accountable. Always.

Too many companies believe they understand the risks and value of information, but are frustratingly passive about doing anything about it. Big data may well be the greatest business asset there is. To pass up the opportunities it offers would not be wise and businesses cannot afford to take that risk.

By Phil Greenwood, Director, Iron Mountain

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