A Day Early and a Dollar Extra:
How Data Helps Agile FinServ Companies Defy Market Volatility
Business agility is worth its weight in gold — and Financial Services (FinServ) companies with the foresight to anticipate change and rapidly adapt will quickly outpace unsuspecting competitors.
This guide explores the modern analytics tools, teams, and techniques leading FinServ organizations need to accelerate decision-making and time-to-action related to financial trading, investment analysis, and regulatory compliance. Readers will learn:
- How rapidly evolving market conditions are driving change in the financial services industry
- What three obstacles are holding FinServ organizations back from enabling domain experts to make fast, data-driven decisions
- How agile processes and collaboration can up-level financial analytics and help organizations stay ahead of the competition
Volatility, Strain, and Disruption: 3 Factors Driving Change In the Financial Services Industry
Global financial market volatility has risen dramatically in the past couple of years, driven by factors including the COVID-19 pandemic, new and increasingly complex regulations for financial institutions, unstable governments, rising economic nationalism, and large-scale hacking by organized criminals and state-sponsored groups.
The long-term economic impacts of COVID-19 are only beginning to take effect. For example, the Federal Reserve’s Beige Book survey notes that disruptions in production and supply chain logistics are responsible for significant price surges in commodities like agricultural products, building materials, cleaning products, and microchips. And, when combined with increased aggregate demand as a result of stimulus checks and PPP loans, one thing is clear: The threat of 1970s-like inflation is real, and FinServ institutions must prepare for further uncertainty.
At the same time, the breakout momentum of new financial instruments such as crypto assets like Bitcoin and Ethereum, new investment vehicles such as SPACs as an alternative to IPOs, and evolving retail investor behaviors are upending many of the traditional ways people build wealth. In today’s financial landscape, “whales” aren’t the only market makers — new investors embracing Robinhood and similar apps, as well as the influence of informal internet communities and crowdsourced stock hype, can influence asset prices in previously unexpected ways.
Under these conditions, the only constant is change. And, while there is no way to prepare, data provides an avenue for FinServ organizations to minimize risk at both macro and micro scale.
Analytics Agility Derisks Financial Services
The ability to analyze data quickly — and turn insights into actions to drive a business forward — is a powerful competitive advantage. For example, in 2017, 70% of top-performing organizations used advanced analytics to overhaul business strategies and update how they compete in their respective markets.
The FinServ industry, perhaps more than any other, is built on complex and iterative data analytics at its core. Yet, according to McKinsey, only 7% of financial services organizations fully leverage analytics in their business.
Agile methodologies and technologies de-risk financial services by creating a highly adaptable culture based on data insights. Agility powers the ability to learn quickly and adjust business direction rapidly as situations change. This allows agile companies to adapt to these changes before more traditional companies can truly understand what has happened.
An agile approach to analytics dramatically improves time-to-action and drives tangible business outcomes such as the ability to:
- Make data-driven decisions at the speed the market demands
- Take a holistic view of market conditions in real time
- Have business experts work with their data in an intuitive environment on their terms
3 Ways FinServ Organizations Can Leverage Data To Defy Market Volatility
Outsmart and outmaneuver the competition by tearing down data operations obstacles
The problem: Traditional BI solutions delay critical decision-making and inhibit much-needed business agility
Time is literal money for FinServ companies. The speed at which organizations make data-driven investment decisions can be the difference between massive profits or devastating losses.
Most traditional analytics tools require data to be heavily modeled by data and BI teams before consumption by domain experts. That means that business users have to know the questions they want answered. But the nature of problem-solving in the industry means that getting to the right answer typically requires domain experts to ask a series of iterative and increasingly complex questions that they may not know in advance.
Without the ability to use their BI tool directly, FinServ experts have no choice but to ask their BI team for help, resulting in a series of ad hoc requests that balloon into multi-week projects where work is repeated and time is wasted trying to better answer the initial question.
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