Big data analytics is extremely useful, states Swift Institute

Big data analytics is extremely useful, states Swift Institute

There are many uses of big data analytics by financial organisations to meet evolving regulatory and compliance requirements, Swift Institute reveals in its recent paper, “The Role of Big Data in Governance: a regulatory and legal perspective of analytics in global financial services”.

The paper cites two case studies as examples of how these analytical tools are influencing operational risk and practices within organisations across the financial services industry.

“With 2.5 quintillion bytes of data generated daily and regulators requesting more data from organisations, analytics have a big role to play,” says Peter Ware, director at Swift Institute. “The research dives into unchartered territory, highlighting the challenges and opportunities for financial organisations using business intelligence tools to improve operational efficiency and compliance.”

Highlights from the research include:

  • Organisations that harness the power of analytics to better understand organisational operations may reap many additional benefits beyond compliance;
  • Improved understanding of operational risks may also allow firms to reduce their requirements to hold higher levels of regulatory capital;
  • Analytics may help organisations better understand how individuals in the firm interact with one another and thereby act to improve lines of communication;
  • Analytics may also assist organisations in vital strategic decision making and related efforts to recruit and retain necessary staff;
  • Firms that embrace information governance techniques are better placed to exploit big data analytics and related future innovations.

Brigitte De Wilde, head of financial crime intelligence and services at Swift, comments to Banking Technology: “Many of the points [raised in the paper] resonate well with what we are seeing in the industry. Exploding data volumes present financial institutions with both opportunities and challenges from a compliance point of view. In large banks, compliance and risk teams often face the challenge of collecting non-standard data from dozens of different systems. Such data contains highly relevant information that can support compliance, but the collection process can divert valuable time from analysis and assessment activities, and it can be a question of searching for the proverbial needle in a haystack.

“In response to stricter compliance requirements and the growth in data volumes, many institutions are deploying increasingly sophisticated – and expensive – analytics tools to mitigate financial crime risk.

“Big data and compliance analytics is a very active space. There is a clear demand for tools that support compliance and facilitate the development of standards and market practice in the longer term.”

The paper’s authors are Dr Daniel Gozman from the University of Reading, and Professor Wendy Currie and Dr Jonathan Seddon from Audencia Nantes School of Management.

Click here to read the paper in full.