Mastering ‘Big Data’ is the Key to Financial Success
By Nick Felton, SVP, MHR Analytics
Running a business is no easy task, particularly in uncertain times with economic and digital disruption causing ongoing issues for company leaders. In the capital markets sector, these challenges are perhaps more acute, with investor apprehension starving organisations of extra funding, at a time when digital innovation is critical.
It is in this scenario that the case for better management of company data becomes clear. The sector is increasingly harnessing the power of information to enable better internal audits, improve transaction reporting, and prevent fraud and crime. For Chief Financial Officers (CFOs) these abilities are seen as a major asset, with 77 per cent saying they see a future where their ability to transform financial data into intelligence will be a necessity to drive growth.
As well as this, in a recent analytics survey, 34 per cent of senior decision makers said they had issues around the practical management of data challenges rather than a lack of skills or technology within the workforce. The research also found that 74 per cent of those questioned admitted to limiting themselves to the data they have immediately available, instead of looking at how analytics can enable sharper insights and predictions about future trends for the business.
For many companies, the CFO is under huge pressure to manage and decrease heavy costs facing the business. Having a clear view of financial data is crucial for understanding where cost savings can be made, and what the consequences of these savings will lead to.
What is clear is that there is a significant gap between businesses understanding the importance of financial data for driving necessary growth, and organisations implementing analytics to maximise their big data output. The issue is often cultural, with organisations lacking the drive to make sweeping changes to critical functions such as reporting, forecasting and general management of financial data.
This is despite the case for increased IT spending being well established. Research conducted as part of our Data Surge report found that 58 per cent of senior decision-makers in large and medium sized businesses were planning to increase spend on IT in 2019. This was also coupled with 93 per cent of businesses expecting a drop in revenue next year. More specifically, 57 per cent told us that they believed Brexit would be the cause of this decline and 22 per cent anticipated reduced consumer spending. Surprisingly, only seven percent of business decision makers did not expect to see a drop in revenue at all.
The amount of businesses expecting a drop in revenue is concerning, particularly for a critical area of trading like the capital markets sector, despite the acknowledgement of more investment being needed in sectors like IT. Companies need to do everything they can to prevent a sudden drop in revenue from affecting their core business. Big data, if harnessed correctly, could provide the key to navigating uncertain times by allowing organisations to spot large, critical issues before they happen, planning potential revenue streams and anticipating changes that are around the corner.
The sheer amount of data that businesses are producing continues to grow and shows no sign of slowing down, to a point where many businesses could soon be hit by a surge of uncontrollable data. This may be in the form of financial data for capital markets that was previously stored in archaic spreadsheets, marketing data, or insights into your customer behaviour. As digital transformation projects mature, managing your organisation’s big data will become even more critical to manage. The sooner a robust data strategy is put in place, the better.
Building a significant data strategy that works across the whole organisation can drive real value for the decision-makers across the organisation. Becoming a data-enabled business will be invaluable for rising above competitors in a saturated market.
For example, businesses become too reliant on manual processes, which are often in the form of spreadsheets, to capture and monitor important financial data. Managing important data throughout various departments on different spreadsheets which then have to be consolidated and merged at the end of the month is counterproductive. As well as time consuming, these processes are at risk of serious error and often don’t give the necessary insights into the whole business.
It is apparent that regardless of headcount and scale of an organisation within the capital markets industry, these archaic and manual systems are no longer fit for purpose. Business intelligence and analytics tools are easily available and have a smooth transition, which can quickly speed up critical data insights. With a significant number of companies setting aside larger budgets in IT for 2019, the time has come for business leaders in capital markets to understand the positives they can gain from implementing a smart data strategy to make better long-term decisions, reduce administration costs and improving data reporting.
Partnership goes beyond aggregating market data and liquidity, to trade execution.
Recognition was granted by the FCA on May 24.
Streaming real-time information provides situational awareness for securities traders.
Wilson has helped grow Neptune to around 30 sell-side and over 50 buy-side clients.
The data will enable the tracking of spoofing, layering, wash trading and collusion.