Investment firms and asset managers famously warn their customers that past performance is no guarantee of future outcomes.
Nevertheless, firms in global capital markets and elsewhere devote much time and energy to churning out internally focused information about past performance, rather than focusing their data and analytical efforts on increasing the effectiveness of corporate future-oriented decision making.
This is not to suggest there is no value in the (predominately internal) data these firms collect and analyse. However, it is somewhat one-dimensional, and limited in its ability to map the path to new market/client and product opportunities.
Forrester Research estimates that less than 0.5% of all data is ever analysed and used while a mere 12% of enterprise data is used to make decisions.
In fact, based on a recent EY survey, 70% of business users cannot access the data they need. Furthermore, Forrester reckons that a 10% increase in data usage for decision making could yield more than USD 65 million in additional net income for a typical Fortune 1,000 company.
There is significant potential in the expanding universe of data outside of traditional organisational boundaries to add additional dimensions and data – in particular client and market data – to increase the effectiveness of organisational decision making. However, this is not an easy journey and most of the heavy lifting is linked to organisational and cultural change rather than a data or analytical challenge.
Capital Markets Participants are both nervous and excited by the possibilities offered by 'Big Data', advanced analytics (for example, Machine Learning (ML) and Artificial Intelligence (AI)) and other digital innovations to harness multiple sources of structured and unstructured data.
The excitement stems from the prospect of deeper analytical insights, more accurate forecasts/predications and ultimately improved outcomes for clients often in the form of 'better' recommendations.
Concerns arise from the significant challenges involved in maximising this opportunity, the cultural change required to adopt an analytical and data driven mindset combined with an inherent 'biases' found in many of the underlying data that may impact client outcomes and corporate decision making.