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Dominant Trends in Financial Services

Originally published March 14, 2006

This past January, Knightsbridge Solutions published its annual white paper, “Top 10 Trends in Business Intelligence,” updated for 2006. It’s clear that business intelligence has become a major priority for financial institutions. If we look at the major business issues in 2005, all of them focused on the need for greater access to data – data of “certified” quality and accuracy, or at an enterprise versus line-of-business (LOB) level, all coupled with enhanced analytics aimed at managing the business from a factual perspective.

Business intelligence is no longer just a synonym for “reporting.” It truly has grown into its last name: “intelligence.” The push is squarely behind using data and analytics to reduce the uncertainty involved in managing a large enterprise. The acceleration of this phenomenon is driven by a number of interesting and converging drivers. 

The Legislative and Regulatory “Calm”
Congress and the regulators top the list of drivers. They rank first not only because of the tightening enforcement that has been driving big fines within the industry, but also because of the “yo-yo” factor regarding compliance with Basel II and Basel IA. Hot and heavy debate continues between Congress and the regulators regarding the soundness and fairness of compliance. The result is a calm in the storm surge toward compliance.

This compliance push drove financial institutions to make major investments, totaling more than $1 billion industry wide, in basic data infrastructure and data governance. These investments were made quickly to meet fast approaching compliance deadlines. Now, with the uncertainty as to the deadline dates, the investments have hit a calm before the storm that has allowed all parties to “re-center” and “re-pace” their data and business intelligence (BI) efforts. As a result, I believe a much sounder data infrastructure will exist to support the individual institutions for years to come.

Enterprise-Level BI
Another Knightsbridge trend for 2006, enterprise-level business intelligence will be a real driver behind some of the most intriguing new concepts in BI and data management for many years to come. The drive to compliance has forced institutions to look at specific “risk” data at an enterprise level. This glimpse has begun to give other parts of the institution insights into the tremendous benefits that are possible if management data can be staged at the enterprise level and more aggressively used to manage the institution. This has led to a soaring interest in topics such as:

  • Data Supermarkets – innovative techniques for pre-staging data from all across the enterprise (e.g., marketing, finance, product management, lines of business, operations, human resources and legal) in a format that enables easy and quick data joins for reports and analysis.

  • Data Certification – an innovative and cost-effective approach to data quality. Data is certified for intended use across multiple layers of criteria – all driven by the data users.

  • Enterprise Dashboards – the old balanced scorecard, but on steroids. A multi-layered approach to tapping into the pulse and health of an organization on a daily/weekly basis.

  • Layered Reporting – gone are the days of creating standardized production and management reports. Instead, enterprise dashboards, parameterized reports and the data supermarket are in demand. These replacements enable faster, more flexible and targeted analysis of problems and emerging market opportunities.

The Rise of the Data-Centric Institution
More and more financial institutions are realizing that rapid, flexible staging of data for unique analysis is required to stay competitive. While speaking with an executive at one of the largest U.S. banks, the subject of Check 21 arose. The bank estimated that full implementation of Check 21 could reduce annual revenue by $1 billion or more. They are now staging data from throughout the enterprise to better understand the potential revenue impact and devise strategies to replace the revenue – a critical task, but no small feat.  

Interconnectivity
We’ve discussed only three of the drivers that I feel are pushing the top 10 trends in business intelligence as outlined by Knightsbridge. As with all trends, there is interconnectivity between the drivers forcing the trends and between the trends themselves. To demonstrate this, the chart in Figure 1 depicts the interconnectivity between the 10 trends identified in the Knightsbridge white paper.

Two of the 10 trends, information quality and enterprise-level BI, provide the larger umbrella themes under which the other trends fall as related aspects or specific components. Enterprise-level BI and information quality are also highly interconnected themselves.

Figure 1: Interconnectivity of BI Trends 

While these interconnections demonstrate the complexity involved in meeting business intelligence challenges, the good news is that BI technologies and methodologies have matured. Organizations can now more easily find the help they need to prioritize their efforts and determine a starting point for their next BI efforts –ands learn from the mistakes and best practices of those who started before them. 

Click here to download a full copy of the Knightsbridge white paper, “Top 10 Trends in Business Intelligence.”

  • Duffie BrunsonDuffie Brunson

    Duffie is a Senior Principal for Financial Services at Knightsbridge Solutions. With more than 30 years of experience in financial institutions as both a banker and consultant, he has been involved with leading-edge developments within the industry, including the creation of the automated clearinghouse, the debit card, in-home transaction services, co-branded credit cards, electronic payment networks, financial advisory/planning services and integrated customer data warehouses.

    Duffie holds an undergraduate degree from the University of Virginia and an MBA from Georgia State University. He is a graduate of the Seidman Auditing School at the University of Wisconsin, and the Stonier School of Banking at Rutgers University. He has served as a member of the ABA's Operations and Automation Quality Council, as a faculty member of the Graduate School of Banking at Colorado, and as a lecturer at the Universita' Cattolica del Sacro Cuore in Milan, Italy.

    Duffie can be reached at dbrunson@knightsbridge.com.

    Editor's note: More financial services articles, resources, news and events are available in the Business Intelligence Network's Financial Services Channel. Be sure to visit today!

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