from surveillance to service excellence - big data in financial services

From Surveillance to Service Excellence

How to turn Compliance into Competitive Advantage

© Copyright 2013 Saggezza. 1

Rob Rensman July 2013

Governments as producers and consumers of Big Data


Volume Variety Velocity

How regulators accelerate the demand for Big Data and Analytics

This picture from Business Week illustrates the sheer volume of legislation that is now in place and drives many institutions to considering Big Data as part of the answer to solve compliance monitoring issues. We are looking at the Dodd-Frank Wall Street Reform and Consumer Protection Act (2010).

This presentation covers a journey that may lead you to see the light at the end of the tunnel: big data on the one hand allows you to tackle the myriad of rules and regulations you face on a day-to-day basis and a powerful source of untapped market- and customer intelligence.

Financial Services Risk and Compliance Management


Headline regulatory frameworks and when they will be enforced*

*based on global coverage across geographies; some local enforcement may be required earlier, e.g. in US or Europe

There are three major pieces of legislation that dominate the compliance landscape in financial services these days: Basel III, Solvency II and The Dodd-Frank Act Most banks and other financial institutions, such as stock-brokers, institutional investors, pension funds and hedge-funds are getting their house in order in anticipation the respective enforcement dates that are set by the regulators on both sides of the Atlantic.

The implementation rules and plans are far from settled and the enforcement dates have been shifting. Most investment banks, however, have programmes in place to address the underlying issues, operational principles and systems challenges to remain on track for the published enforcement dates.

How Big Data Can Support Regulatory Compliance


The Volcker Rule (part of Dodd-Frank) is a case in point

SUR

VEILLAN

CE

Regulator

Risk/ Compliance

Ops

Finance

Group Reporting

Trade 1

Trade 2

Trade 3

Trade 4

Analytics

P/L Positions

System 1

System 2

System n

Trade Desk 1

Trade Desk 2

Trade Desk n

Trade 1

Trade 2

Trade 3

Trade 4

Trade 1

Trade 2

Trade 3

Trade 4

Asset Class

Financial Institutions need to create a capability to acquire, analyse and act on large volumes of transactional data at high speed to allow for real-time and actionable decision making with regards to above or below threshold values of certain types or sources of transactions or trades, and changes in patterns of behaviour, preferences or exposure with regards to positions taken.

How to Leverage your Compliance and deliver Value Can we pursue a strategy of growth and innovation whilst satisfying the regulator?

Ambition Compliance

Restrictions on proprietary trading and hedging

Trade analysis and deal history (full transaction traceability) combining internal and external sources

Recapitalisation, liquidity and stress testing

Complex risk analysis and reporting

Customer perception and trust in their bank of choice

Stability of operating environment, balance sheet / P&L

Perform better risk and portfolio management

Market insights by using advanced analytics, combining internal and external sources

Customer Service and Retention

Product and Service Pricing

Fraud, Identity Theft and AML

Reputational Risk and Sentiment Analysis

Credit Risk

Use Cases That Drive The Need For Big Data


How can the dreaded ROI gap be plugged

How can we detect service deteriorations and outages using multiple data sources before they start affecting the network nodes and lead to critical loss of service? Although the data can be extracted from various sources, internal OSS systems, log files and social media commentary, it proved hard to prepare, visualise and enact without a big data solution.

Lessons From Main Street


How other regulated industries have embraced big data to gain better insights

Detection Insight

Lube Insights delivered: 1.  Improved ETL processing in Hadoop 2.  Import and apply open source

algorithms to ensure the right correlations could be made

3.  Visualise the output in different types of diagrams with dynamic data

4.  Dispatch maintenance teams to carry out preventative maintenance to those nodes that displayed above threshold levels of service deterioration.

Telecoms Service Provider

Our Proposed Solution Allows You To Move Ahead


We help you remove the compliance barriers and deliver on new business insights

Surveillance Service Excellence

Consume

Analyse

Prepare

Collect

Messages, Alerts,

Reports

Thresholds, Breaches, Tolerances

Trade & Positions

Trading Systems

Market Data Systems

Existing Data Stores

Insights & Actions

Patterns & Profiles

Trends & Events

Customer & Partner Data

External Data

The functionality required to deliver surveillance allows you to start working on service excellence: generating proofs of concept that allow the wider business to create insights and actionable results based on data that was not readily available to the business user before

Strategy Alignment Will Raise The Game Compliance becomes a ‘means to an end’

Advanced Analytics

Ambition Compliance

Market Data

External Behavioural Data

Transactional (Trade) Data

Customer Data

CCO

CRO

BU Head

CMO

COO

CIO

From the compliance officer to the COO, right across to the BU Management Team: all will benefit from an advanced analytics capability powered by big data.

Next Steps


Depending on where you are on your big data journey

1 2 3 Starting Scaling Up Solidifying

Scalability

One Insight – High Impact

Pilot Team

Few Data Sources

Risk

Centre of Excellence

“All You Can Eat”

Embedment

Insights On Demand

Business Growth

Distribution

Dedicated Team

Multiple Data Sources

Multiple Insights

Compliance

This is not a roadmap for adopting Big Data – your needs will be unique, but there are highlights on the way to maturity

Thank you!


Rob Rensman VP Business Transformation

Saggezza UK

email: [email protected]