In financial services, access to big data and analytics is creating a huge opportunity to improve everything from efficiency, accuracy and speed to fraud prevention. Specialising in analytics, business intelligence and data management, SAS aims to help its customers make important decisions faster, better and with more confidence. Here Vincent Kilcoyne, Fintech Innovation Lead at SAS UK & Ireland, talks about the firm’s new Fintech Incubator and what’s next for financial services.
Where is biggest opportunity for analytics in finance?
I see a huge amount of it within the Fintech space. Sadly that is because the financial services industry is very late to the game in terms of looking at advanced analytics and big data. That being said, being late means we can take advantage of tried, tested and proven techniques more quickly.
Computing power is now able to deliver insight at the speed which capital markets operate. That has been the fundamental challenge until now: for capital markets to gain access to that level of analytics at the speed they need it so they can consume and use the insights that emerge.
Why did you launch the SAS Fintech Incubator programme?
I saw what the government is doing to support Fintech startups such as tax incentives plus the growing investment structure as a unique opportunity to help entrepreneurs. Many are fundamentally taking data, analysing it and delivering that analysed data in a use case. If we can take away 70/75 per cent of that problem by analysing the data, then helping the Fintech render it we have compressed the entire time to engagement, investor engagement and creating a viable product.
We can help startups – and, indeed, established Fintechs – validate or improve their solution and help them engage with customers in a supportive environment as well as with marketing, press, and providing demo facilities. It’s not only software we provide, it’s about de-risking their entire investment proposition.
It seems like a lot of people are paying lip service to innovation right now?
I hear a lot of people talking about innovation but I don’t hear anything innovative. We’re making people really walk the walk and helping them to do so in less time.
The biggest impediment to real innovation is the amount of time that is required. This creates attrition - you run out of money, you do not engage quickly enough, you do not have that first mover advantage or someone loses interest and moves onto another Fintech. We are trying to compress the time within which the innovator truly sees validation that gains customers, investors and further endorses success.
What kind of hurdles is SAS helping Fintech companies tackle?
In the payments sector there are so many providers that it’s becoming hard for them to differentiate themselves. Then it becomes a case of differentiating on customer knowledge: how well do I know my customer? How capable am I of moving my services from one bank to another while preserving the quality of service? How strong are my relationships with the banks providing me services as a utility? Because that is what the banks will become: utility providers that can take deposits because they have the licenses, while the Fintech takes responsibility for the customer service and ownership. That is one area where we can work.
We are also working with a number of others who are providing advanced analytics on structured and unstructured data to be able to provide additional services, like robo-advisory across the capital markets and private client wealth management. That is where we give those kinds of businesses access to our advanced analytics and things like machine learning and sentiment analysis.
Why are you excited about machine learning?
Machine learning as a concept is nothing new. What is new is the extent to which it can be applied in a time frame that is relevant. Machine learning technology used to take minutes or days. Now machine learning techniques can be run in real time and consume larger quantities of data, to do much deeper thinking and analysis, to give you much better quality of decision and support in a much smaller time frame. It’s about being able to do more, better.
The tech is there, the analytics are there, so it’s a question of how I use it? Do I use it for fraud and surveillance? Can I use it for revenue protection or growth? Can I find new products? There is a new world of what is possible. It is magnificent – everyone is realising that new things are possible and that was the biggest impediment to the banks and the industry: they didn’t realise what was possible.
What’s your prediction for the next couple of years?
I’d be interested to see what happens to the major vendors and providers in the industry. It’s interesting how the relationship between the banks and the Fintechs will evolve. Regulation around open API and PSD means that banks will have to evolve to a new relationship in which you and I are no longer the customer. Now the Fintech and the digital bank is the customer. They will have to start working out how do they best serve those.
There is a new world order coming about and that will change the way the banks operate and innovate. They will not be innovating to serve the customer, they will be innovating to serve the Fintech and the digital bank. That is what I think is going to be the disruptive play.