In what key ways are big data and smart data changing the face of international banking and finance?
According to IDC, the big data market currently stands at about $130.1 billion and a full 13 per cent of that spend is in banking. IDC expects the market to grow $201 billion by 2020 and I would not be surprised if banking wasn’t a much greater slice of the market by then.
That is because I think data analytics is going to become the cornerstone of a bank’s competitive advantage. One of the very interesting trends we have seen recently, which illustrates this, is that, although banks are in many cases reducing their technology spend, they are putting more budget into purchasing market data. At the same time, venues are charging more for the trade data services which they offer, reflecting the value that data represents to trading institutions.
With the leaps forward that we are seeing in machine learning and analytics more broadly, the banks can see the potential that data holds to improve the performance of their trading desks, picking out trends and patterns that no human could compute at the speed of thought. That is why they are prepared to spend so much on this data.
However, in many cases they are underutilising the data which they already hold. Banks’ trade data is spread across their organisation in different databases and held in different formats if banks bought that data together into one secure, standardised data lake, it could really speed up their big data adoption and slash the cost of buying in market data at the same time.