With as much as USD$350 billion up for grabs, the incentive for financial institutions to use new technologies effectively has never been greater.
New technologies are born every day, but they only become powerful when they are used creatively to tackle problems and make things work better. That’s when they create value.
Thomson Reuters Financial & Risk recently hosted an Enterprise Technology Forum, which centered on a discussion of two related technologies: cloud and Big Data. These are not new technologies, but they are increasingly being applied by financial firms to solve real problems.
There was a wide-ranging, enthusiastic and frank discussion about the challenges as well as the opportunities of applying these technologies. Three themes stood out to me:
The creativity about how to use tools like cloud and Big Data to generate value will always start with businesspeople addressing specific problems or finding interesting new use cases.
One of the challenges identified was that in the absence of a clearly defined data strategy, businesses often fall into the trap of having technology look for a problem – a classic case of the tail wagging the dog. This is exacerbated because technologists – either within the business itself or as consultants – don’t necessarily understand the data they manage. This is a challenge that extends well beyond the financial services community.
Many agreed the solution lies in more dialogue between technology experts and the business managers who understand their clients and the challenges they face. Better mutual understanding means that technology will be used a tool to solve real problems.
Data is a huge asset for businesses, and many aren’t realizing its true value to them. The winners of the future will the business that capitalize on the unrealized value they are sitting on and use the technology tools of cloud and Big Data to unlock that value. While business like us can give them the tools they need (like our Knowledge Graph feed), it the financial service firms that have the creativity to use them.
While there were disagreements about how quickly financial services businesses would move to cloud, there was a consensus that cloud is the future.
We wanted to know how quickly the businesses we work with are planning to move to the cloud, so we asked when they expected to have the majority of their market data infrastructure in the cloud. The results were mixed, with a third expecting to reach this point within just two years, but two thirds expecting it to take three or more years.
Clearly, many people in the room who were cloud evangelists had encountered caution and a risk-averse culture in their organizations, which is unsurprising from an industry that is among the most heavily regulated sectors. But it was also clear that some of the perceived disadvantages of using public cloud, like security and service reliability, are falling away.
A lot of people said that there has been a change in their thinking: when they start to tackle a a new problem, one of the first questions is whether cloud is part of the answer. That hasn’t been the case in the past. And as millennials, who have grown up with the cloud as their playground, make up a bigger share of the workforce, confidence in the cloud as a default option will grow.
Financial services firms are excited about the agility that the cloud enables
Financial services has always embraced technology and moved quickly to innovate and provide value for customers. But the pace of change has accelerated. One of the reasons the industry is so excited about cloud is the ability it provides to experiment and partner to try things out quickly. Innovation and agility are two of the key drivers for firms’ cloud migration strategy.
There was clearly a lot of experimentation taking place. And it was clear that many businesses, like ourselves, are embracing partnership as a way to accelerate innovation.
There is a big prize for those that get it right
The latest McKinsey research predicts banks could earn an extra USD$350 billion of profit by 2025 by using new technology such as artificial intelligence, Big Data analytics and cloud. Businesses that get their data strategy right and use cloud and Big Data tools effectively to implement their strategy will benefit most from the huge business opportunities these technologies enable.
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