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Report finds Big Data usage has produced underwhelming returns

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A new report, from Swiss research company MyPrivateBanking, finds that in recent years, financial providers have looked for ways to leverage the power of Big Data by implementing new digital ecosystems intended to take advantage of increased data volume.

The report finds that many of these projects have produced underwhelming returns, if not outright failure.  Big Data for Wealth Management – A Practical Guide for Successful Implementation’ identifies the reasons for this and what wealth managers should do about it.

“Too many financial actors focus on the “how” of implementing Big Data projects rather than the “why” and this is a sure way to set Big Data projects up for failure,’ argues Onawa Lacewell, Senior Analyst at MyPrivateBanking, on the reasons that Big Data projects of wealth managers do not provide the outcomes they had hoped for. “Successful projects must have a needs-based focus, with the primary business objective always at the centre of the implementation process. With this approach Big Data offers tremendous opportunities to serve existing clients better, acquire new ones and at the same time save costs and solve support compliance”.

According to MyPrivateBanking’s research, wealth managers need to reverse the standard implementation process. Rather than finding a vendor and solutions first, they must strive for a needs-based implementation: identifying organisational needs, determining which data best address these needs (and whether they already have the necessary data) and then, in a last step, choosing the correct infrastructure to meet these needs.

The report offers a set of practical tools for five common needs that wealth managers can address with Big Data: Serving existing clients better with Big Data: this need focuses on how Big Data ought to be used for existing client retention, loyalty building and increasing revenues per client; Finding new clients using Big Data: including using Big Data to increase the success of targeted marketing and onboarding; Increasing adviser functionality with a Big Data solution: perhaps the most popular way that Big Data can help wealth managers is by decreasing the amount of time advisors spend on manual data entry tasks, the firm writes.

Other suggestions for advisers include using Big Data for regulation, compliance, and risk detection. The firm writes that Big Data is a natural way to help financial providers meet regulatory demands in terms of fiduciary laws and Know Your Customer legislation. “We suggest ways that Big Data can help with compliance as well as risk detection.”
 
Another suggestion is rescuing failing Big Data projects. “Given that many Big Data projects have returned lacklustre results, we look at ways that wealth managers can rescue failing projects.”

To aid in this process the report recommends several practical tools for wealth managers who are looking to integrate a Big Data solution into their existing digital ecosystem using a needs-based approach, such as a Big Data Scorecard to assist with developing measures of success and ROI for Big Data projects.

In MyPrivateBanking’s view Big Data solutions will always require a tailor-made approach that depends on needs, but it notes there are some general points such as keeping clients in mind. “Implementing Big Data solutions will mean big changes for the client-facing portions of wealth managers. Keeping a close eye on what clients think about new, data-driven processes is important. Understanding not only what Big Data can do for the organization but also for your clients is paramount to a successful Big Data plan,” the firm writes.

“Be sure that external data is absolutely necessary. Many types of external data are unstructured and require more advanced levels of collection, cleaning, and computing to be used fully. Wealth managers should make sure that they have a clear use for external data before implementing a plan to collect it. Without a concrete idea of the expected need for the data, the chances of having a lot of external data sitting around gathering dust are high.

“Evaluate organisational structures and don’t be afraid to break down silos. Research has made clear that one of the biggest roadblocks to implementing a Big Data solution is the existence of organizational silos. Breaking down these barriers will ease the transition to a fact-based, data-driven business model.”

“The technological abilities are growing rapidly year by year and the current flood of data is, in reality, only the very beginning of the Big Data phenomenon.” Says Lacewell. “Wealth managers should keep a close eye on developments in offerings suiting their individual needs and not be afraid to think outside the box when it comes to using Big Data.”

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