Helena Schwenk, VP Chief Data and Analytics Office at Exasol
Data analytics platforms are central to the operations of financial services firms. Whether it’s transforming core business processes, shaping customer experience, or adhering to compliance regulations, the ability to capture and interrogate data provides the context for the business-critical decisions that firms need to get right.
The power to leverage data is even more important given the impact of the pandemic, with businesses making significant decisions about the level of real estate, staffing, and technological investment that they need in a post-pandemic work environment. Crises like these highlight the need for firms to be able to rely on high-performance in-memory platforms that offer speed, scalability, and flexibility regardless of where organisations are on their cloud journey.
In financial services, a sector that’s so inherently data-intensive, this is more important still. Without high-performing analytics, there are four key initiatives that risk being left by the wayside: fraud detection, customer experience, compliance reporting, and trading analysis.
- Accelerating fraud analytics to minimise losses
Fraud detection requires analysis of large, diverse, and disconnected data volumes to identify suspicious activity or trends at a faster pace. This is especially challenging given the changing nature of fraudster’s schemes, with businesses needing to integrate more data into analysis to keep up with new incidents.
Grappling with these increasing masses of data requires machine learning (ML), running complex analysis to test multiple scenarios and identify repeating patterns – or, indeed, outliers. In-memory analytics accelerates this process, supercharging fraud detection with immediate insights to identify irregular sequences and unknown fraud schemes.
As such, financial firms can detect fraud faster than ever before without compromising on security or performance, avoiding losses and keeping customer satisfaction high by authenticating legitimate transactions quickly.
For instance, fintech provider Iyzico, who provide online payment services, use AI-powered fraud detection algorithms to identify suspicious transactions, as well as protect legitimate customers and keep high conversion rates. By leveraging in-memory analytics to run queries faster, they meet their goal of making fraud decisions on online shopping transactions in under 50 milliseconds.
- Boosting CX with instant insights
Firms are racing to improve customer experiences with personalised offers that make consumers feel recognised as individuals. That could mean insurers providing tailored policies and quotes, or banks offering finance options that match the needs of account holders.
Getting this right boosts retention rates, reduces churn, and ultimately secures the bottom line. To achieve it, financial services firms need to convert raw data into actionable insights that’ll grant them the coveted 360-degree customer view to understand their customers as people.
As a result, firms are wrestling with vast stores of customer data, attempting to integrate, process, and analyse billions of records from multiple sources. Whether it’s customer service reporting, or churn prediction, in-memory distributed architectures ensure optimal analytics performance for many users by supporting high concurrency.
This gives firms accelerated time to customer insights, which enables a better customer experience. The quicker a firm can access insights, the faster it can serve its customers and meet their expectations, allowing them to address customer issues, identify opportunities for new business, and provide personalised communication when recommending services.
- Ensuring on-time, on-budget compliance reporting
Banks and insurers are under constant pressure to meet new and existing regulatory standards. Regulations like Dodd-Frank, Solvency II, and CCAR require firms to give accurate risk reports and conduct stress tests against large volumes of internal and external data, and meet multiple deadlines on a quarterly and annual basis. Noncompliance means loss of customers, PR issues, hefty fines, and even prison sentences.
These risks are too great for firms to rely upon underperforming, costly data warehouses for compliance reporting. That’s why in-memory MPP architectures are so crucial, expediting the entire regulatory reporting process from data ingestion to report creation and auditing. Firms can not only reduce the time for reporting to meet the stringent deadlines, but they can also speed up ad hoc query performance to answer auditor’s questions in a timely manner.
Many regulations require financial firms to keep sensitive data on-premises, and report on data stored both in the cloud and in-house. To optimise reporting within hybrid cloud environments, an in-memory database leverages data virtualisation to access data anywhere it resides without moving it, eliminating costly extract, transform and load (ETL) processes and reducing the risk of a data breach.
For example, Siemens-Betriebskrankenkasse (SBK), a health insurance company, consolidated its complex data sources – including compliance data – into a single warehouse. This has cut down data query delivery time from six and a half hours to 21 minutes while ensuring data privacy.
- Unlocking high-speed trading analysis for better investment
Investors need near-instant data to inform their decisions and generate higher returns. Minor delays in analytics delivery could mean material losses. The sheer volume, variety and velocity of the data is not suited to legacy data warehouse systems. Successful trade analysis means evaluating large amounts of data from diverse sources, including market data, media channels, and information from financial data providers throughout the trading process.
A highly scalable, in-memory analytics data warehouse can boost the performance of this important trade analysis, such as transaction cost analysis (TCA) and advanced algorithms power real-time financial analysis. These faster insights will enable investors to make better, more agile decisions at any time, without the need to wait for reports.
It’s time for an analytics upgrade
Thriving in finance today requires a greater level of agility. Firms need to turn their data into opportunity by upgrading their analytics capabilities to support real-time decision making, increasing profitability and delivering value to customers. That means having the right data infrastructure to handle mission-critical, time-sensitive workloads.
The pandemic won’t be the last crisis to impact the sector, which means firms need to move away from legacy data storage solutions and embrace new platforms that support high performance, scalability, and flexibility at their foundation. These capabilities will allow institutions to remain agile during difficult times, maintain steady operations during more buoyant conditions – and stay ahead regardless of the circumstances.
Wealth Managers and the Future of Trust: Insights from CFA Institute’s 2022 Investor Trust Study
Author: Rhodri Preece, CFA, Senior Head of Research, CFA Institute
Corporate responsibility is more important than ever. Today, many investors expect more than just profit from their financial decisions; they want easy access to financial products and to be able to express personal values through their investments. Crucial to meeting these new investor expectations is trust in the financial services providers that enable investors to build wealth and realise personal goals. Trust is the bedrock of client relationships and investor confidence.
The 2022 CFA Institute Investor Trust Study – the fifth in a biennial series – found that trust levels in financial services among retail and institutional investors have reached an all-time high. Reflecting the views of 3,588 retail investors and 976 institutional investors across 15 markets globally, the report is a barometer of sentiment and an encouraging indicator of the trust gains in financial services.
Wealth managers may want to know how this trust can be cultivated, and how they can enhance it within their own organisations. I outline three key trends that will shape the future of client trust.
THE RISE OF ESG
ESG metrics have risen to prominence in recent years, as investors increasingly look at environmental, social and governance factors when assessing risks and opportunities. These metrics have an impact on investor confidence and their propensity to invest; we find that among retail investors, 31% expect ESG investing to result in higher risk-adjusted returns, while 44% are primarily motivated to invest in ESG strategies because they want to express personal values or invest in companies that have a positive impact on society or the environment.
The Trust Study shows us that ESG is stimulating confidence more broadly. Of those surveyed, 78% of institutional investors said the growth of ESG strategies had improved their trust in financial services. 100% of this group expressed an interest in ESG investing strategies, as did 77% of retail investors.
There are also different priorities within ESG strategies, and our study found a clear divide between which issues were top of mind for retail investors compared to institutional investors. Retail investors were more focused on investments that tackled climate change and clean energy use, while institutional investors placed a greater focus on data protection and privacy, and sustainable supply chain management.
What is clear is that the rise of ESG investing is building trust and creating opportunities for new products.
TECHNOLOGY MULTIPLIES TRUST
Technology has the power to democratise finance. In financial services, technological developments have lowered costs and increased access to markets, thereby levelling the playing field. Allowing easy monitoring of investments, digital platforms and apps are empowering more people than ever to engage in investing. For wealth managers, these digital advancements mean an opportunity for improved connection and communication with investors, a strategy that also enhances trust.
The study shows us that the benefits of technology are being felt, with 50% of retail investors and 87% of institutional investors expressing that increased use of technology increases trust in their financial advisers and asset managers, respectively. Technology is also leading to enhanced transparency, with the majority of retail and institutional investors believing that their adviser or investment firms are very transparent.
It’s worth acknowledging here that a taste for technology-based investing varies across age groups. More than 70% of millennials expressed a preference for technology tools to help navigate their investment strategy over a human advisor. Of the over-65s surveyed, however, just 30% expressed the same choice.
THE PULL OF PERSONALISATION
How does an investor’s personal connection to their investments manifest? There are two primary ways. The first is to have an adviser who understands you personally, the second is to have investments that achieve your personal objectives and resonate with what you value.
Among retail investors surveyed for the study, 78% expressed a desire for personalised products or services to help them meet their investing needs. Of these, 68% said they’d pay higher fees for this service.
So, what does personalisation actually look like? The study identifies the top three products of interest among retail investors. They are: direct indexing (investment indexes that are tailored to specific needs); impact funds (those that allow investors to pursue strategies designed to achieve specific real-world outcomes); and personalised research (customised for each investor).
When it comes to this last product, it’s worth noting that choosing advisors with shared values is also becoming more significant. Three-quarters of respondents to the survey said having an adviser that shares one’s values is at least somewhat important to them. Another way a personal connection with clients can be established is through a strong brand, and the proportion of retail investors favouring a brand they can trust over individuals they can count on continues to grow; it reached 55% in the 2022 survey, up from 51% in 2020 and 33% in 2016.
TRUST IN THE FUTURE
As the pressure on corporations to demonstrate their trustworthiness increases, investors will also look to financial services to bolster trust. Wealth managers that embrace ESG issues and preferences, enhanced technology tools, and personalisation, can demonstrate their value and build durable client relationships over market cycles.
How to Build Your Credit Up Safely
by Taylor McKnight, Author for Compare Credit
What Is Credit?
Credit is money owed by a person that allows them to pay off debts at a lower interest rate. Most banks use your credit score to determine how much they should lend you. Any business loan or mortgage requires that you have a good credit history. However, if someone has poor credit(www.comparecredit.com/credit-cards/credit-range/poor/), they may struggle to pay back these loans, resulting in higher interest payments, making it more difficult than ever to repay the debt. Lenders are aware of this issue and keep a close eye on your credit rating to ensure that no negative information gets reported. This could prevent you from getting another loan in the future. It is important to note that having a bad credit score does not mean you have had a bankruptcy or other kinds of defaults. Many people often face this problem because of unpaid bills or late payment fees. However, this does not mean that you cannot repair your credit – it simply means that all parties involved must work together to solve the problem.
How to build your credit safely
Building your credit score is a major concern for most people, especially if they plan to purchase something as big as a home or car. A good credit score will help one get better rates in the future and make it easier to finance their next venture. Here are some things you should know to improve your credit to be used for the best possible purposes.
1. Keep paying down your balances every month: One of the biggest mistakes that could hurt your credit score is not paying your balance down each month. People who don’t pay their credit card down within the agreed-upon time typically have high-interest rates and expensive monthly costs.
2. Pay your bills on time: The same goes for making payments on a bill. Not paying it within the specified timeframe will result in negative information being added to your report, further lowering your credit score. Ensure that your bank statements are accurate and that all accounts are up to date.
3. Become an authorized user: Some companies will allow customers to become authorized users after meeting certain requirements. Take a look at the terms and conditions before applying for this option. These programs usually give access to one particular service, such as checking or ATM transactions, but are helpful when you need additional coverage.
4. Set up automatic credit card payments: There are several ways to set up auto payment options on your credit cards, including sending them directly to your checking account via email or the phone. In addition, you may want to consider enrolling in online banking services that automatically make payments from your checking account into your credit card accounts.
Other tips when it comes to credit
1. Learn how to manage debt responsibly. This is true for both personal and business debts. Many people tend to spend more than they earn, especially during rapid growth and expansion. If you find yourself facing difficult circumstances, you can seek assistance by talking to friends and family members, getting professional advice, or using online budgeting tools.
2. Don’t skip any repayments. This rule applies specifically to late payments. You need to continue making regular payments, even if you’re behind by a few days or weeks. Once you miss a payment, you’ll start accumulating late payments that negatively impact your score.
3. Try consolidating your loans. Consolidation involves combining multiple small loans from various sources into one large loan, thereby lowering the total interest cost of the loan and reducing the risk associated with it.
4. Be wise with your credit report. One huge mistake most people make is neglecting to pay their bills on time or paying only the minimum due balance each month. As a result, bad information remains on their reports, impacting their scores. All outstanding balances must be paid off completely. Otherwise, negative items that remain on your report can keep you from achieving the best borrowing potential.
5. Get your questions answered. If you have any questions regarding your credit, ask for answers now rather than waiting until you’re experiencing trouble. With a little research, you should be able to learn enough to begin repairing your damaged credit report.
What to look out for that can harm your credit
1. Not checking your credit report: Most people use their credit cards frequently but fail to check their credit reports periodically. Checking at least every 12 months can give you valuable insight into whether or not there are errors on your credit.
2. Paying your bills late: Late payments can lead to hard inquiries affecting your score, which means it appears that you’ve applied for more credit elsewhere. Make sure you never miss a bill.
3 You Close Old or Inactive Credit Cards: If your close old cards, they may show up on your credit report for some time. Closing accounts can impact your score by causing “hard inquiries” that appear on your credit report. Before closing them, look for inactive or closed card accounts on your credit report.
4. You Have Negative Records: Many people think they’re protected because they haven’t had past credit problems. However, many factors may cause a “bad” rating to linger. A single application for a credit product with a low limit may count towards a negative review.
5. There Are Errors on Your Report: Mistakes such as missing debt or inflated balances can damage your credit report. Find out how much money you owe and what types of products you purchased, then try to dispute those entries on your credit report. Ensure you correct any information that needs to be corrected. Failing to do so could hurt your chances of getting approved for future credit.
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