How Data Can Provide Agility and Competitive Edge | Gresham

The financial services industry is undergoing an intense period of transformation. With the Covid-19 pandemic accelerating moves towards digitalisation, global competition, and regulatory scrutiny, firms are operating in an environment that demands the ability to pivot on the latest development at any moment in time.

So how do firms remain competitive in this increasingly complex landscape? The answer is simple: through the optimisation of their data.

A better understanding of the accuracy, timeliness and completeness of your data ultimately leads to a better understanding of your business. To achieve this, firms need to identify problems earlier, and they need to evidence controls at granular levels across their operations. Get this right, and the rewards can be considerable.

Market volatility and regulation are fundamental and well-cited areas where getting data right can bring significant benefits to the business. Market volatility has dominated this year, and this shows no signs of stopping, with vaccine announcements recently driving spikes in volume. To keep apace, you need systems that can process complex data sets at high volumes in real-time, ensuring you’re never trading off old information.

When it comes to regulation, all reporting is data driven, whether it’s MiFIDII, MAS or CAT. And with FINRA issuing an eye-watering $39.5m in fines in 2019, it’s clear many firms still don’t have the right data processes in place.

But it does not stop there. What firms need to see is the strategic asset that data was born to be. As increasing numbers of firms compete to provide best in class technologies and services, innovation becomes a key differentiator. And the effective application of data across the business is vital for firms if they are to keep up with the speed that the market is currently innovating at. With firms in APAC investing heavily in technology, the rest of the world must ensure that they prioritise data led innovation in order to remain competitive.

To harness the power of data, you need to start by looking at the systems that process it. Legacy systems are a huge barrier to supporting this goal. Those that continue to rely on technology stacks designed decades ago will simply be unable to meet modern demand. The sheer number of spreadsheet-based controls alone remains surprising. This is because there is often a hesitancy to move away from legacy due to a fear of rising costs, when in fact it can reduce total cost of ownership by 74% across the business.

But it’s not just about how you collect and transfer your data; it’s about how you analyse it. Predictive analytics tools will be vital to ensuring that this data can be easily interpreted and utilised firm wide. The easier data is to interpret, the more you can do with it. What this, and the points above show, is that data should not be an afterthought or tick box exercise. It can and should be the foundation of your business strategy. If you don’t validate, reconcile and report it in a way that ensures your firm is ready for anything, then you’re on the losing end of the scale.

Firms in the financial services industry face a difficult period, with challenges appearing around every corner. Data will form the foundation of their response, not only allowing them to meet these issues with adaptability, but when used right, give them a competitive edge.