Data Management, Big Data and the Cloud: The Convergence of Mature and Emerging Technologies and how this delivers Competitive Advantages for Investment Firms

By David Csiki | 27 September 2015

While advanced technologies geared towards getting a competitive edge through data have been available for some time, but mainly to larger financial services firms who can afford the investment, the trend of who is adopting these is changing.

In particular, the advent of cloud technology and the originally slow but now steady adoption of this across financial services firms has lowered the costs considerably, meaning that a wider group of businesses, particularly investment firms, can now use this technology for a range of business processes, such a data management, disaster recovery and investment decision making. The insights it brings to portfolio managers is remarkable.

David J. Csiki from INDATA talks about how, with advanced data management and cloud computing tools readily available to a wider range of firms, investment firms of all sizes are now being empowered to take their businesses to the next level.   

In the beginning, there was data management…

The concept of data management has been around for quite a while. Enterprise Data Management (EDM) can be defined as an organisation's ability to effectively create, integrate, disseminate and manage data for all enterprise applications, processes and entities requiring timely and accurate data delivery.

For the typical financial or investment management firm, EDM had been until recently a somewhat esoteric topic, however industry demand for greater compliance and transparency has driven the need for more timely and accurate data, making EDM now an important topic for many financial professionals.

And as a result, historically the EDM solutions that have occupied the space have been designed with only the largest of organisations in mind, those with the wherewithal and budget to potentially spend millions of dollars and often a period of years to implement a solution.  Originally (and to this day in many instances), these solutions have been designed for companies that are running large-scale in-house IT staffs.  Applications like enterprise data warehouses come to mind when thinking about traditional EDM tools, and deploying these solutions required both the physical equipment and the IT know-how to make them happen. However now the demands for great data transparency, amongst other things, have made EDM a more common practice to a wider group of participants.

Then came the Cloud…

With the cloud, IT essentially becomes a commodity that can be tapped into as needed.  At its core, cloud computing has the potential to provide a number of advantages for financial firms including significant cost savings in the area of IT, better scalability, and built-in disaster recovery.

In fact, many finance and investment firms have been able to reduce technology and operational costs, successfully manage growth, and demonstrate disaster recovery and sound business continuity planning practices to their stakeholders by deploying cloud solutions.  While there have been and continue to be concerns over security and data privacy, both of which have a lot to do with what cloud model is used, i.e. public vs. private; the truth of the matter is that the cloud is already a mature and widely adopted technology delivery vehicle within the financial services industry. The reality is that financial firms who are not using cloud solutions in some capacity would be considered a rarity.   

Along comes Big Data…

Another game-changing technology is now emerging, namely big data.  Big data technology has a potential leading current and future role to play in a number of areas within finance and investment management, including front office analytics, portfolio decision making, compliance, and other key functions.

There are varying definitions of big data.  Perhaps the most practical would be the process of collecting and managing very large and complex data sets for meaningful analysis and actionable intelligence. Regarding the concept of what constitutes a “large” or “complex” data sets, there can be no doubt that the data being consumed by financial firms is only growing. 

Rather than looking strictly at size as the complete measure of what constitutes a big data type of situation, the concept of “wide” data has been used to successfully describe the challenges faced by many financial firms. With wide data, the typical organisation is more often concerned with tying together data from disparate sources, often a wide range of sources, for meaningful analysis.

Some firms still remain skeptical of whether big data technologies actually apply to them.  Nothing could be further from the truth.  With all of the underlying large-scale tech providers within both the consumer and business segments in an arms race to gear their back end tech toward the era of big data (think Apple, Google, Microsoft, IBM, Oracle), the big data tools that can be utilised to provide big data type analytics are nothing short of revolutionary as compared to what was previously available from a technology perspective. 

And now, convergence…

A technology transformation is underway and savvy firms are starting to think about leveraging their previous investments in the cloud in an attempt to gain additional insights into their data.  By utilising emerging big data technology tools that take advantage of established cloud infrastructures, finance and investment firms can now gain additional insights into their data that they were never able to generate before using the previous technologies that were available. 

Firms that recognise importance of big data and its connection to the cloud stand to take a giant leap over their competitors who are still focused on narrow areas of their businesses and not the big picture.  With the proper direction and guidance, even small firms now have the same capabilities that only the largest of firms could afford previously, all without the significant expense and IT headcount that used to be norm.

By David J. Csiki, President, INDATA

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