IDC Financial Insights: Analytics in Financial Services


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IDC Financial Insights: Analytics in Financial Services
Scott Lundstrom, GVP IDC
June 25, 2013 The Langham Hotel Boston, MA

Published in: Business, Economy & Finance
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IDC Financial Insights: Analytics in Financial Services

  1. 1. Analytics in Financial ServicesScott LundstromGVP & GM IDC Financial Insights
  2. 2. IDC Snap ShotMarket Intelligence, Research and Advisory• 1200+ analysts providing a global information community• Coverage of 50+ countries around the world• Almost 50 years experience analyzing IT and Communications end-user and vendor marketsIIAR “Global Analyst Firm of the Year” 2012
  3. 3. World Wide Financial ServicesThe Dynamics of 2013© IDC Visit us at and follow us on Twitter: @IDC 3
  4. 4. Macro Priorities Optimize Capital From balance sheet planning and performance, to liquiditymanagement, to IT investments, capital optimization is king Create Omni-channel Experience A more consistent customer experience acrossall channels and a strong move to mobile Renew IT Infrastructures Legacy infrastructure continues to plague performance Weather Economic Turbulence and Regulation Find value in uneven markets and make compliance risk apredictable operating expense.
  5. 5.  Exceed the expectations of current and targetedcustomers Continually streamline business processes toachieve profitability, flexibility and adaptability Maintain constant awareness using analyticalcompetencies of external and internal events andrisks to better shape strategic decisions andtactical initiatives Build in evolving local, country and regionalregulationsAn Operational Vantage PointContinuing Global “Reality”
  6. 6. A New Platform for the New Reality Big data, cloud, mobile and socialtechnologies will continue to be at theforefront of discussions between IT andbusiness professionals at financialinstitutions Together, these technologies form thefoundation of a "Third Platform", whichwill allow greater flexibility and agility While some of these technologies arefurther down the maturity and adoptioncurve than others, all will be importantcomponents for driving value in 2013and beyond5
  7. 7. 7Transformation is HappeningFocus on the Desired Outcomes The increase and sophistication of these disruptivetechnologies is highlighting the need for businessmodel transformation in financial services Leading this change is ultimately the consumer whois enabled by mobile technology to dictate when andhow they will interact with the marketplace andbusinessThis shift has profound implications for institutions inhow they interact with customers, how employeesdeliver goods and services, and ultimately how ITdelivers services
  8. 8.  Regulatory pressures in global business demands financial firms re-think value of thetechnologies, data management, and business process used to operate effectively,compete, and manage risk. Convergence of intelligent devices, social business, pervasive broadband networking, andanalytics ushers in a new platform for building and servicing relationships between bankers,customers, partners, and regulators “Analytics” is the NEWEST Core. Increasingly vital to harness information - make dataactionable, optimized, timely, keep risks at anticipated and acceptable levels, and uncoveropportunities ahead of the competition IT Reliability and Efficiency increases as risk factor. Age and complexity of systems,lacking resources and skills for legacy systems , push to reduce costs and meet regulatoryrequirements means additional outages, errors, and missteps.Reality of ………..Economic Instability and Financial Reform8
  9. 9. Business and IT Balancing ActRisk and Innovation9Efficiency &EffectivenessNew Services & RevenueOpportunitiesChannels, Analytics, &Customer EngagementRegulation & ComplianceInnovation versusOperation
  10. 10. Global Financial ServicesInformation Technology Spend by Sector© IDC Visit us at and follow us on Twitter: @IDC 10$USD MillionsSource: IDC Financial Insights Banking, Insurance, Capital Markets, Risk WW IT Spending Guide, Jan 2013
  11. 11. Overall 2013 IT Budget OutlookBrighter Than Recent Past0%5%10%15%20%25%30%35%40%45%50%Increase Decrease Stay the SameAvg. increase = 11.4%Avg. decrease = 3.6%n= 68US and WE respondentsSource: IDC 2013 CIO Sentiment Survey, Fall 2012Q. In 2013, do you expect your total IT budget to increase, decrease or remain the same as 2012?Please indicate the percentage change in your IT budget from 2012 to 2013.11
  12. 12. Business and Performance ManagementModels can exist in any one of these areas; they are different models in terms of data, methodology, delivery,use and validation requirements. Diversity of models becomes a challenge, also making sure all models arevalidatedSpatial InformationAnalytics ToolsContent Analysis ToolsBusiness Intelligence ToolsQuery, Reporting, andAnalysis ToolsDashboards, production reporting,OLAP, ad-hoc queryAdvanced Analytics ToolsData mining and statisticsPerformance Management & Analytic ApplicationsFinancial Performance& Strategy ManagementBudgeting, Planning, Consolidation,Profitability, PerformanceManagementCRM Analytic ApplicationsSales -, Customer Service -,Contact Center -, Marketing -, WebSite AnalyticsCredit RiskAnalytic ApplicationsCredit Analytics, Default Probability,Loss Given DefaultInvestment ManagementAnalytic ApplicationsPortfolio Modeling,Investment/Concentration ScenarioModelingCapital OptimizationAnalytic ApplicationsLiquidity Risk, Asset LiabilityManagementOperational ControlsSystemsAudit, GRC, SIEMData WarehouseEvent Discovery, Collection, Consolidation LayerCommon Infrastructure (compute, storage, networking, integration)Fraud ManagementAML, Payment Fraud, Insider
  13. 13. Financial Analysis, Risk Management, & (profitable)Customer Acquisition Driving Risk Analytics MarketplaceN = 93Source: IDC Global Technology and Industry Research Organization IT Survey, 2012Q. What were the top 3 drivers for your organization to implement Business Intelligence/Analyticssolutions?2.218.418.623.623.828.929.635.635.838.345.10 20 40 60OtherOptimization of operationsWorkforce optimizationProduct or service innovationCustomer retention and serviceInternal reporting and informationsharingRegulatory compliance requirementsCost control or reductionNew customer acquisitionRisk managementFinancial reporting and analysis(%)
  14. 14. Attention is Therefore Turning to AnalyticsMost Impact To Business Units0 5 10 15 20 25 30 35 40Faster analysis (e.g. ability toevaluate more scenarios)Faster access to information(i.e., faster query response times)More accurate analysisAbility to aggregate more data sourcesAbility to aggregate structuredand unstructured dataDecrease in number of systems requiredto answer business questionsOtherCRO “the number ofquestions we’re beingasked on both the tacticaland analytic level hasgone through the roof”• Which of the following changes or improvements would you expect to have the most positive impact on yourorganization or business unit (both business and IT)? Multiple responses accepted.
  15. 15. Q. What recognized benefits has your organization achieved as a result of implementing a BusinessIntelligence/Analytics solution?2.20.618.026.922.123.127.435.333.634.132.80 20 40OtherImproved Workforce optimizationImproved risk managementImproved efficiency of financial reportingand analysisImproved regulatory compliance processImproved internal reporting andinformation sharingImproved optimization of operationsReduced costsImproved customer retention and serviceImproved new customer acquisitionImproved product or service innovation(%)N = 93Source: IDC Global Technology and Industry Research Organization IT Survey, 2012For those able to measure benefits, value in improved riskmanagement and financial analysis trails value in customeracquisition and product innovation.
  16. 16. © IDC Visit us at and follow us on Twitter: @IDC 16
  17. 17. Scott LundstromGVP & GMIDC Financial Insightsslundstrom@idc.comp: 508-935-4767IDC Financial Insightswww.idc-fi.comIDC Financial Insights