NEW YORK — More than half of senior retail, commercial and investment bankers say they lack sufficient data to support robust risk management according to a recent survey conducted by The Economist Intelligence Unit (EIU) and sponsored by SAP SE. “How Big Data Can Help Banks Manage Risk” looks at how banks are using Big Data to improve risk management and compliance performance. The report also found that four in 10 bankers face significant challenges turning existing risk data into actionable information, and they lack the technology to do so. The announcement was made at the SAP Financial Services Forum New York, taking place October 21-22 in New York City.
Despite the growing volume and complexity of data due to the spread of digitization, multiplication of channels and demands from regulators, there is still not enough information for banks to support robust risk management. Compounding the data analysis struggle, 37 percent of banks report they cannot predict where the biggest return will occur when they need to decide where to invest in risk management.
“It is clear that today’s banks are coming up against big challenges in risk management, however there are new tools available that help aggregate, evaluate and streamline data analytics to alleviate these struggles,” said Steven Leslie, financial services analyst, The Economist Intelligence Unit. “If banks can take advantage of Big Data-driven tools to gain insight into the business, they will begin to see a drastic improvement in risk management strategies and outcomes.”
With significantly decreased storage costs and access to unstructured data including text, audio and images, banks have an unprecedented opportunity to evaluate more information than ever before. However, appropriate analytics applications are needed to enable these insights. More than half of bank executives and CIOs surveyed report the need for an enterprise-wide framework for stakeholders to achieve a holistic perspective of all risks confronting the organization.
“Moving forward, centralized analytics will play a key role in banks’ abilities to capitalize on Big Data and to develop effective risk management strategies,” said Ross Wainwright, global head of financial services at SAP. “Novel and diverse data sources, such as 24/7 mobile device sensor and social media analytics, are likely to gain traction as data increases in value, volume and velocity.”
In July 2014 The Economist Intelligence Unit (EIU) carried out a global survey of 208 senior risk and compliance executives at retail, investment and commercial banks, seeking insights into how banks are using big data to improve risk management and compliance performance. Half worked in the C-suite, the others were at the vice president or director level with 63 percent from the risk management function and the rest working in the compliance function. 29 percent of executives were from retail banks, 28 percent were from investment banks, and 43 percent worked at commercial banks. Executives were a diverse global group, divided equally among North America, Asia-Pacific, Europe, and the rest of the world.
A summarizing article from The Economist Intelligence Unit can be found here.