The Finance Foundation
Reinventing capitalism for all
AUTHOR
Michel
Gabrysiak
President of the Finance Foundation

Governance of financial Information becomes a key to Finance Tomorrow
August 11, 2014 , Michel Gabrysiak - Finance tech
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Financial institutions gather information about their clients, sales, loans and investments, etc. and therefore have been piling up mountains of information. 
How to harness this passive repository of information to generate additional value. Big data analytics gives that opportunity.

 

ROI = return on information
Is Big data a new field? Not really. In the 90's, companies also used their expanding clients data sets to increase sales. For example, supermarkets store for every client the time and items purchased and use this information for direct advertising. This was called then "data mining". Today, much more extra data are at our disposal coming from the Internet, Google, Twitter, etc. but it is also much less clear how to derive a return on information.
There are two possible ways: to use their internal resources to expand profits (organic growth) or to get resources outside the company (inorganic growth).

 

Create value in finance
Financial institutions have begun to exploit their own datasets to grow. For example, retail banks can improve their customers’ relations by analyzing their socio-economic characteristics. An example is attracting the partner of a client to join the bank by offering discounts and a free tablet PC.
Another way to bolster revenues is achieved by combining different sources of information, e.g. investment banks can now use high frequency stock market transactions in combination with social media data. For example, today Twitter is used to measure market sentiment in real time investment decisions.
New regulations continue to multiply. For example, the European Market Infrastructure Regulation obliges all financial institutions to report daily derivatives trades to a central trade repository since January 2014. Derivative contracts contain insights in future market fluctuations and dependencies, this new source of data could be used to improve the computation of risk measures.
Despite successful cases, questions about legal and regulatory arise about protection of the customers’ privacy.  Also, there’s a lack of a clear holistic framework about data management. Departments seem to operate often autonomously leaving data unused and sealed off from the rest of the organization, also known as data silos.
The strength of data governance resides in the availability of the data for the entire corporation. Furthermore, it ensures data security and data privacy compliance through identification of threats and control of standards that meet security needs and compliance obligations. 
As a way to cope with the sheer volume of data, data governance enables a harmonized organization making easier to retrieve information when needed
and create significant value for the company.
 

 

Write to The Finance Foundation at info@finance-foundation.com
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