From Surveillance to Service Excellence - Big Data in Financial Services

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Regulatory compliance has become a drain on many FS organisations’ capital investment programmes. Some of the emerging surveillance and reporting issues will likely be solved using big data technologies. It would appear beneficial if the same technologies and infrastructure could be used to solve wider business growth and performance issues. This could help jump-start some of those business improvement programmes that may have been mothballed due to lack of demonstrable ROI. This presentation focuses on the merits of creating a ubiquitous advanced analytics platform that will serve both the business and the regulator, without the need for large, upfront investment programmes.

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From Surveillance to Service Excellence - Big Data in Financial Services

  1. 1. From Surveillance to Service Excellence How to turn Compliance into Competitive Advantage © Copyright 2013 Saggezza. 1 Rob Rensman July 2013
  2. 2. Governments as producers and consumers of Big Data © Copyright 2013 Saggezza. 2 Volume Variety Velocity How regulators accelerate the demand for Big Data and Analytics This picture from Business Week illustrates the sheer volume of legislation that is now in place and drives many institutions to considering Big Data as part of the answer to solve compliance monitoring issues. We are looking at the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010). This presentation covers a journey that may lead you to see the light at the end of the tunnel: big data on the one hand allows you to tackle the myriad of rules and regulations you face on a day-to-day basis and a powerful source of untapped market- and customer intelligence.
  3. 3. Financial Services Risk and Compliance Management © Copyright 2013 Saggezza. 3 Headline regulatory frameworks and when they will be enforced* *based on global coverage across geographies; some local enforcement may be required earlier, e.g. in US or Europe There are three major pieces of legislation that dominate the compliance landscape in financial services these days: Basel III, Solvency II and The Dodd- Frank Act Most banks and other financial institutions, such as stock-brokers, institutional investors, pension funds and hedge-funds are getting their house in order in anticipation the respective enforcement dates that are set by the regulators on both sides of the Atlantic. The implementation rules and plans are far from settled and the enforcement dates have been shifting. Most investment banks, however, have programmes in place to address the underlying issues, operational principles and systems challenges to remain on track for the published enforcement dates.
  4. 4. How Big Data Can Support Regulatory Compliance © Copyright 2013 Saggezza. 4 The Volcker Rule (part of Dodd-Frank) is a case in point SURVEILLANCE Regulator Risk/ Compliance Ops Finance Group Reporting Trade 1 Trade 2 Trade 3 Trade 4 Analytics P/L Positions System 1 System 2 System n Trade Desk 1 Trade Desk 2 Trade Desk n Trade 1 Trade 2 Trade 3 Trade 4 Trade 1 Trade 2 Trade 3 Trade 4 Asset Class Financial Institutions need to create a capability to acquire, analyse and act on large volumes of transactional data at high speed to allow for real-time and actionable decision making with regards to above or below threshold values of certain types or sources of transactions or trades, and changes in patterns of behaviour, preferences or exposure with regards to positions taken.
  5. 5. How to Leverage your Compliance and deliver Value Can we pursue a strategy of growth and innovation whilst satisfying the regulator? AmbitionCompliance Restrictions on proprietary trading and hedging Trade analysis and deal history (full transaction traceability) combining internal and external sources Recapitalisation, liquidity and stress testing Complex risk analysis and reporting Customer perception and trust in their bank of choice Stability of operating environment, balance sheet / P&L Perform better risk and portfolio management Market insights by using advanced analytics, combining internal and external sources
  6. 6. Customer Service and Retention Product and Service Pricing Fraud, Identity Theft and AML Reputational Risk and Sentiment Analysis Credit Risk Use Cases That Drive The Need For Big Data © Copyright 2013 Saggezza. 6 How can the dreaded ROI gap be plugged
  7. 7. How can we detect service deteriorations and outages using multiple data sources before they start affecting the network nodes and lead to critical loss of service? Although the data can be extracted from various sources, internal OSS systems, log files and social media commentary, it proved hard to prepare, visualise and enact without a big data solution. Lessons From Main Street © Copyright 2013 Saggezza. 7 How other regulated industries have embraced big data to gain better insights Detection Insight Lube Insights delivered: 1.  Improved ETL processing in Hadoop 2.  Import and apply open source algorithms to ensure the right correlations could be made 3.  Visualise the output in different types of diagrams with dynamic data 4.  Dispatch maintenance teams to carry out preventative maintenance to those nodes that displayed above threshold levels of service deterioration. Telecoms Service Provider
  8. 8. Our Proposed Solution Allows You To Move Ahead © Copyright 2013 Saggezza. 8 We help you remove the compliance barriers and deliver on new business insights Surveillance Service Excellence Consume Analyse Prepare Collect Messages, Alerts, Reports Thresholds, Breaches, Tolerances Trade & Positions Trading Systems Market Data Systems Existing Data Stores Insights & Actions Patterns & Profiles Trends & Events Customer & Partner Data External Data The functionality required to deliver surveillance allows you to start working on service excellence: generating proofs of concept that allow the wider business to create insights and actionable results based on data that was not readily available to the business user before
  9. 9. Strategy Alignment Will Raise The Game Compliance becomes a ‘means to an end’ Advanced Analytics AmbitionCompliance Market Data External Behavioural Data Transactional (Trade) Data Customer Data CCO CRO BU Head CMO COO CIO From the compliance officer to the COO, right across to the BU Management Team: all will benefit from an advanced analytics capability powered by big data.
  10. 10. Next Steps © Copyright 2013 Saggezza. 10 Depending on where you are on your big data journey 1 2 3Starting Scaling Up Solidifying Scalability One Insight – High Impact Pilot Team Few Data Sources Risk Centre of Excellence “All You Can Eat” Embedment Insights On Demand Business Growth Distribution Dedicated Team Multiple Data Sources Multiple Insights Compliance This is not a roadmap for adopting Big Data – your needs will be unique, but there are highlights on the way to maturity
  11. 11. Thank you! © Copyright 2013 Saggezza. 11 Rob Rensman VP Business Transformation Saggezza UK email: rob.rensman@saggezza.com

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