UXBRIDGE, U.K., November 25, 2015 – Financial services companies are increasing their use of Big Data initiatives to combat fraud according to a recent study conducted by Forrester Consulting on behalf of Xerox.
During the next 12 months, nearly half (48%) of IT and business decision-makers surveyed in the financial sector said they will analyse historical customer data to identify and address potential fraudulent behaviour.
In keeping with this, data security and privacy are cited as the number one challenge for financial services firms (44%) over the next 12-24 months. With the new General Data Protection Regulation (GDPR) set to come into effect by 2017, data privacy concerns likely will become only more stringent for firms going forward.
Craig Saunders, director, Analytics Resource Center, Xerox Consulting and Analytics Services, said: “Detecting and communicating fraud is a huge challenge and a very sensitive one when customer financial data is at stake. More firms are realising the need to invest in technical infrastructures, in such a way that allows them to explore unique customer information, identifying patterns and quickly noticing changes to this. It’s encouraging to see this type of work remains a priority for the coming years.”
Over the next 12-24 months financial services firms identified the following as their biggest challenges...
Data security & privacy (44%)
legal & regulatory compliance (43%)
analytical & reporting requirements (42%)
lack of data engineering skills (41%)
poor c-level support (40%)
The findings follow wider research1 into European organisations’ approach to Big Data, commissioned by Xerox and conducted by Forrester Consulting, this study focuses on the results of 90 large financial firms, including those in banking, financial services and insurance.
The lack of compliance and skill
Beyond targeting the fraudsters, financial services providers also feel challenged by the need to keep up with growing expectations for legal compliance (43%) and reporting (42%).
With this increased need for transparency in financial systems, it is perhaps unsurprising that firms also believe sourcing appropriate data engineering skills (41%) will be a significant issue in the future. To this end, one third (33%) of total respondents plan to hire more data engineers and data scientists over the next 12–24 months.
But this may only serve to mask the larger issue, as Xerox’s research finds more than two thirds (69%) of FS firms are still encountering inaccurate data in their systems – meaning a comprehensive clean-up may be needed internally before these companies can accurately capture the insights they need within their data.
In the next 12 months, bigger investments in trading & risk analytics (65%) will help to address future fraud detection. But as far as improving existing data sets, the study showed that for financial services firms in particular, 28% of respondents plan to partner with external providers to bring Big Data projects up to speed in the next 12 months.
Saunders added: “The thought of relying on inaccurate data would likely keep financial executives up at night, but what is clear is that the large majority of firms are moving forward with Big Data technology as a cross-organisational strategy. Properly implemented with the right partners, the sector will soon discover a wealth of insight that can right previous wrongs, and provide opportunities to improve existing services too.”
Data Leadership Summit
As part of a panel discussion at the flagship Data Leadership Summit held at the Hilton London Kensington Hotel, Saunders will discuss the importance of analytics and intelligence in the enterprise including how businesses should take advantage of Big Data insights. Saunders’ session – titled ‘Where’s the Business Value?’ – will take place on 26th November at 11.50 am.
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Sonia Panchal, Xerox
+44 (0)1895 84 2877
1About the Study
Definition: Forrester defines Big Data as a set of methodologies, processes, architectures, and technologies, where specific hardware, algorithms, knowledge or processes beyond the standard techniques used in data analytics are required to deal with data of large volume, velocity or variety of data in order to obtain value.
In this study, “Big Data in Western Europe Today”, Forrester conducted an online survey of 330 senior business (CEO, HR, Finance, and Marketing) and IT decision-makers in Retail, High Tech, Industrial and Financial service organisations in Belgium, France, Germany, the Netherlands, and the UK. The study was completed in January 2015.
The study refers to 'data maturity' groups: the Datarati, Data-explorers and Data-laggards. These groups were determined by scoring the survey respondents on the level of agreement they gave to a set of statements about their big data and analytics capabilities.
The Xerox report on the study can be downloaded from here: http://xerox.bz/1cADdoU