The challenge of being able to take in and then analyze a firm's data will see the greatest amount of investment during the coming years. Anthony recommends that banks look to Major League Baseball and the Houston Astros for guidance as to how to rebuild their legacy data infrastructures.
Because I was a stubborn, argumentative child ─ traits that have stayed with me all these years ─ I grew up a Houston Astros fan and not a supporter of the New York Yankees. My dad wears pinstripes, through-and-through, but rather than root along with him, I wanted to cheer for someone else just so I could debate him afterwards. To this day, my dad is my best friend, so it was nothing against him; I just find it to be more fun to "argue against" than "cheer with."
While I've never seen the Astros win a World Series ─ actually, no one has because it's never happened ─ I have witnessed many excellent teams and players. But if you follow baseball at all, you'd know that the four seasons previous to this year have been abysmal. From 2011-14 the Astros lost more than 400 games, fans stopped showing up to the ballpark, and the media and even baseball insiders ridiculed the club.
But something that became unfamiliar is once again happening ─ the Houston Astros are winning and are in first place in the American League West. A few seasons ago, with an aging line-up and a depleted farm system, Houston's front office decided to figuratively burn the house down: They traded all their valuable pieces to acquire minor league talent, and with each losing season they were able to draft elite kids out of high school and college. Some teams, like the Oakland Athletics, try this because they don't want to pay for big-time talent. But the Astros' rebuild was calculated to intentionally suffer through a few losing seasons to grow a team that could compete for a decade to come.
Will the move pay off? We have no idea and won't know for years to come. The general manager and owner will either be hailed as geniuses or fools, with nothing in between. But for once, this season has been fun to watch. It's a joy to see kids come up from the minors and have a positive impact on the Big League club. This team is still probably at best a .500 squad, but who knows, maybe they will pull off a minor miracle and make the playoffs this year?
There’s no blueprint for a CDO in a financial services firm. Are they on par with the CIO or CTO, or merely a tool to be used?
It's been a long time since Houston has seen a positive ROI, but after four years, we're starting to get results.
The Path Less Traveled
At this year's North American Financial Information Summit, the closing panel featured a discussion on the role of a chief data officer (CDO). One thing that emerged from that discussion was the fact that there's no blueprint for a CDO in a financial services firm. Are they on par with the CIO or CTO, or merely a tool to be used or a data figurehead? Who makes the final call on data-related investment? Will they have the final say on which vendor to choose after an RFP?
As I noted in a recent Waters data management special report, capital markets firms need to extract value from their data for managing risk and monitoring anomalies both inside the firm and in the market as a whole. It's about pre-trade risk, post-trade analysis, and making sure that the firm is stable during volatile conditions. This simply cannot be achieved without clean, up-to-the-second information that is well organized, deliverable exactly when needed, and formatted in a way such that it can be drilled into and shuttled across business units.
Is that why CDOs are becoming so popular on Wall Street? Some banks (much like the New York Yankees) are trying to spend their way out of the holes they've created for themselves. Some banks (similar to Major League franchises like the Philadelphia Phillies) continue to stick their heads in the sand and have no game plan for how to deal with this challenge. And some banks (like the Astros) are burning the house down but are investing heavily in analytics to help guide their decisions.
Who's right and which strategy is the best? I don't know the answers to those questions, but I do know that I'll be rooting for the banks that have chosen to take the same route that the Astros have chosen.
While at Sibos Toronto, James shares some interviews covering topics on blockchain, fintechs and cybersecurity.Subscribe to Weekly Wrap emails