Having trouble sticking with your New Year’s resolutions? Let’s face it, making big changes isn’t easy, especially when they’re about self-improvement or expanding one’s horizons. They require investment and perseverance, and can be an arduous but rewarding journey.
Think you’re alone? On the contrary, the financial data industry is on a constant journey of self-transformation. And with good cause: Despite being among the industries with the highest estimated earnings growth for Q4 2013, financial institutions still score negatively on Thomson Reuters’ TRust benchmark, with trust in financials declining over Q3 2013, according to its sentiment indicators.
But whereas the business of vendors like Thomson Reuters is helping clients turn raw data into intelligence, some end-users—specifically private equity firms—are struggling to make that leap from data to actionable business intelligence, according to a recent survey conducted by research firm Tabb Group and financial IT vendor SunGard, with 57 percent bemoaning the time required to gain a complete view of their portfolios, 50 percent citing a lack of front-to-back system integration as preventing operational efficiency, and 50 percent citing a lack of frequent and timely reporting. One conclusion of the research was that, particularly with an increased regulatory burden, firms must have strong data management practices to ensure they can aggregate and report data correctly.
If the ever-turning wheel of new regulation isn’t reinventing the financial markets enough, there are plenty of other opportunities and challenges facing industry participants and newcomers alike.
In a recent post on his website, analyst-turned-technology advisor Adam Honoré of MarketsTech LLC, predicts a new equities exchange—possibly from a completely new entrant to the industry, such as Google. Lending credence to this idea is how Google and many other websites and portals—some explicitly e-commerce sites—are already marketplaces for information, if not goods. Crowdfunding sites are a small leap from private equity placements; auction sites are commodities exchanges of sorts; while gaming sites create and trade synthetic assets. The key to these portals’ ability to adapt into new markets won’t hinge on what they trade now, but how well they manage data, and whether those generic principles can be applied to other areas.
Applying principles originally developed for algorithmic trading and complex event processing to new areas is high on the agenda of John Bates, chief technology officer for intelligent business operations and Big Data at Software AG, which acquired his Apama division from Progress Software last year, such as adapting technologies from trading to monitor fraud, provide supply chain visibility or streamline large-scale shipping operations, while also creating new inputs by capturing, quantifying and responding to information not just from structured data or unstructured text, but sources like video.
Data inventory and cost management vendor MDSL is also reinventing itself, broadening the principles it learned from monitoring data, and applying these to areas such as index license management and completely new areas such as trading connectivity cost management.
The concept of reinvention and rejuvenation isn’t limited to corporations. Honoré predicts “a talent exodus” because the industry is neither as profitable nor as interesting as in the past. Some industries considered to be leaps and bounds ahead of finance in deriving value from data may not want former finance execs, whereas companies with disruptive technologies looking to apply these to financial markets are probably in need of seasoned capital markets veterans who can help them navigate new waters.
So—with a nod to upcoming Oscar nominations—will you navigate these new waters silently like Robert Redford in All is Lost, heroically like Tom Hanks in Captain Phillips, or will you just (spoiler alert) drift into oblivion like George Clooney in Gravity?
Should regulators take a more active role when it comes to AI oversight, or leave it to the professionals? What will M&A look like in 2018?Subscribe to Weekly Wrap emails