- A new report and video released today by The Economist Intelligence Unit finds that 51% banking risk and compliance executives see insufficient data as the greatest obstacle to better risk management
- Although most banks make strong use data to build risk profiles, only 42% have faith that they have the right big data tools to integrate structured and unstructured data
- Liquidity and credit risks are the top challenges that banks anticipate facing in the next three years—which could benefit significantly from big data applications
A new report published on December 10th, 2014 by The Economist Intelligence Unit finds that 51% banking risk and compliance executives see insufficient data as the greatest obstacle to better risk management. Retail banks and big data, sponsored by SAP, is based on a survey of 208 risk management and compliance executives at retail, commercial and investment banks around the world. The report is also accompanied by a motion graphics video that illustrates the key findings, Banking on big data.
Liquidity and credit risks remains a concern for executives, reflecting the increased risk exposures that banks face in the wake of the financial crisis. 46% of respondents say that the most promising big data opportunity is being able to link seemingly unconnected external events in real time. In a related finding, 44% cite the ability to predict the amount and cost of capital required in stressful market situations.
The research also finds that executives consider the most useful current application for big data to be risk management activities aimed at preventing credit fraud, with 45% of survey respondents saying it can facilitate near-instantaneous customer contact to verify suspicious transactions. According to risk executives, the second most useful big data application is guarding against loan defaults, and 45% said the best opportunity lies in monitoring borrower behaviour to anticipate and respond to this type of risk.
Erica Klein, the editor of the report and video, said: “Complexity has grown across every level of the banking industry. Although banks today already use data to offset that risk, big data can take their efforts to the next level. Our survey demonstrates that banks are embracing big data and then investing in related analytic tools. But there are still face challenges in applying the results to deliver superior risk management performance—particularly in relation to liquidity and credit risk.”