Innovation to determine winners and losers in finance’s data race

Innovation to determine winners and losers in finance’s data race

The financial services sector needs to urgently improve its game in data management, says Azhar Muhammad-Saul

There will be little respite for CIOs and CTOs in the New Year in the competitive race to better manage the complexity of their organisations’ data supply chains.

That struggle is nowhere more poignant or urgent than in the financial services industry. 2013 demonstrated the financial sector was dangerously lagging in innovating to address data management challenges.

Last year, the global technology economy exceeded US$4.8 trillion and accounted for 6 per cent of the world’s GDP. Data volumes grew by 40 per cent while IT spending grew by only 5 per cent.

In 2014, financial services companies are expected to spend more than US$430 billion on technology. Bloomberg’s customers (representing a wide swathe of the financial services space) say they will assign, on average, almost 7 per cent of their revenues and 8.5 per cent of their operating expenditure to IT.

Managing complex data and its inherent risks is driving innovation that must be both rapid and decisive to keep apace with changes in the financial services sector. But there is clearly a disparity between the scale and urgency of the data management challenges and the industry’s response.

Events that began in 2008 – the mortgage meltdown, subsequent credit freeze and economic recession – mean today’s financial markets ecosystem is being redesigned.

Lower and erratic trading volumes, shrinking spreads and commissions and evolving regulatory oversight – which at once is seeking consistency but is becoming more fragmented across markets – are transformative. Only the most nimble, innovative and efficient will prosper.

Financial services companies are now expected to provide greater transparency, more extensive compliance measures, tighter management of risk and faster responses to new regulations – simultaneously and across multiple regions and regulatory regimes.

What’s more, to stay competitive, CTOs and CIOs are being told to do more with less. To cut costs and minimise total cost of ownership. To improve ROI and maximise existing technology spend while improving business performance – all using fewer resources.

The challenge, particularly in Asia, boils down to this. Companies must address difficulties in acquiring quality data from inconsistent data sources across front, middle and back offices. They must rationalise multiple redundant sources of information stemming from disparate legacy systems using varying data shapes and models.

They need to eradicate gaps in data workflow with technologies that move the right data to the right applications. To do so they must invest in technologies that have the flexibility and adaptive relevance to manage transparency across multi-market evolving regulatory frameworks.

Companies in Asia that best understand and address these challenges can turn them into new opportunities to build a competitive edge. In fact, while failing to address the challenge would have dire consequences, conversely many Asian firms and international companies with operations in Asia also have a unique opportunity.

Less burdened by legacy, complexity and intransigence of old systems, embracing new enterprise approaches offers the tantalising prospect of being able to leapfrog traditional competition – to embrace the next changes without being constrained by decisions made five or 10 years ago.

So, as we move into 2014 and enter the Year of the Horse, we see the need for many of our customers and most companies in the financial services sector to address these challenges at a gallop rather than a trot.

We expect CIOs and CTOs to be sharpening their focus – and their spend – on acquiring quality data, working to better organise and move that data around the enterprise and find new and better ways to using it effectively.

As the environment for customers has changed, our industry has also had to respond to those new imperatives. Bloomberg has moved into the enterprise challenges of our customers – from desktop access to embedded and bespoke solutions. We now have a suite of products and services that help solve the difficult data problems faced by financial institutions and corporations.

Increasingly, information needs to be comprised of high-quality content to fuel the trading workflow – data that is bespoke, accurate and dependable – backed by solutions that are both scalable and adaptable.

Real-time, reference and pricing data managed and accessed across market data platforms and applications executed through order management and electronic trading are increasingly in demand. An enterprise data management approach that also supports rigorous risk management and reporting has become fundamental to dealing with market evolution.

Critical content needs to be distributed effectively to key decision makers. And to get ahead of big data, managed services provide proven ways to manage large volumes of data with speed, efficiency and precision.

All companies recognise the need to manage big data more efficiently. The speed of investment and innovation in a smarter enterprise workflow will be a key determinant of the winners and losers in the financial sector in 2014. It’s a core business priority, not an IT abstract.

Azhar Muhammad-Saul is head of technical sales and client services, Bloomberg Enterprise Content & Distribution, Asia Pacific

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