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Data analytics uncovers new insights for investment banks - SWIFT

First Published 28th May 2015

Pascal Roland, senior market manager for securities at SWIFT, looks at the challenges investment banks face and how they can gain new insights and uncover new opportunities for innovation.

Pascal Roland, Senior Marketing Manager, Securities, SWIFT

Pascal Roland, Senior Marketing Manager, Securities, SWIFT

"The integration and treatment of data within an organisation is crucial to facilitate better strategic decision making, performance monitoring and risk and cost assessments."

Investment banks are facing many challenges: they have to cope with multiple new global regulations that when implemented at a national level are diverse, but are also often overlapping and cause duplicated efforts. Their profits have been falling as they scramble to put in place all these measures; and they have been obliged to prioritise, exit or significantly reduce some activities that either carried too much risk, were not profitable enough or both.

Operationally, the situation is even more complex. In the past, investment banks have tended to invest in their front office activities, over their underlying operational processes where growing complexity was tackled by adding more resources and more applications. High revenues from trading and client activities seemed to prevent a focus on structural reforms in the back office. Since then a number of large investment banks have streamlined their operational infrastructure and processes in order to reduce their costs, and to reinforce their risk and control procedures, to respond to regulators' growing demands. To do this, some have outsourced, near-shored or off-shored their operations.

Regardless of where operations are based, having up-to-date analytics to aid decision making is a key priority. Investment banks are currently relying on a multitude of information technology sources to help build their business strategy. The integration and treatment of data within an organisation is crucial to facilitate better strategic decision making, performance monitoring and risk and cost assessments. Considering new ways to better manage the vast amounts of data that they are exchanging with the outside world is seen not only as a necessity, but also as an opportunity to capture more business by analysing the behaviours of customers and markets.

Investment banks currently have access to a number of management information systems on various internal operations departments, but it is often difficult to get a single and independent view to validate this information against the market and turn it into meaningful business insights. Having a central source of data on securities flows will instead enable investment banks to validate and enhance the quality of the information provided to their management teams or to external parties like regulators, while ensuring better monitoring of their clients' and subsidiaries' activities.

Through analysis of data and the insights that the analysis provides, investment banks will be able to identify areas of inefficiencies that need to be rectified in order to streamline operations, as well as benchmark themselves against their peers. To be successful and to survive the challenges of today and tomorrow, investment banks will need to combine the technological innovation of data analysis with wiser management of resources.