Vast Data at Financial Institutions Speaks to Vast Opportunities

Editor’s Note: The author of this post works in the eDiscovery industry and is teaching a course on eDiscovery at Touro Law Center this fall.

By Chris Gallagher, national director of eQ discovery services

It’s hard to think of many industries that have more sensitive data than financial services. Although the term “Big Data” seems to be met with more groans and eye rolls than a parent speaking with a teenager, there are some major benefits to big data in banking, and business in general, that we will begin to see embraced in 2016.

Advanced technologies such as Hadoop, Spark hardware acceleration, TIBCO, SAS, and Oracle appliances are just a few tools that are allowing organizations greater insight into their data. The benefits to be recognized in financial services are immense as they rely on technology to handle the increased regulatory requirements and customers’ demands with far less staff.

Financial institutions have always had vast amounts of private customer data, but until recently parsing that information and using it in a way that could show direct return on investment has been difficult at best. Advanced analytics and predictive technology now allows institutions to use data to target clients for additional services and initiate marketing messages to the right customer at the right time. Customer offers based on location, purchases, or even tweets bemoaning their current banking relationship, can all be used as triggers to further engage existing clients, and can also be used to gain new ones. Data mining, which used to be a multi-month process, can now be done in moments and even beforehand based on patterns of activity and purchases.

With great data comes great responsibility and as we have seen in recent years, eDiscovery is not a matter of if; but a matter of when it will be used, especially in the world of heavy banking regulation. The very same technology used to acquire new customers and make sense of the vast amounts of data can be used even more effectively internally. As disputes arise, consolidations once again heat up, and investigations continue, a point of clarity remains- developing a cost effective information governance and eDiscovery strategy is of paramount importance to an organization’s ability to not only flourish, but survive.

Opportunities abound for the use of predictive technology to not only shine in the post-litigation hold eDiscovery arena, but to cut off potential litigation or investigations before they even begin.

A major opportunity for financial services, and corporations in general, is to use analytic resources for internal communications, rather than focusing on just customer-focused interactions. It is in this setting that analytics can be trained to see problems before they become emergencies. The ability to detect patterns in communication, understand not just keywords in emails but the context in which they are used, can highlight areas of concern to compliance departments tasked with keeping pace with a myriad of constantly evolving regulations from FINRA, CCAR, to the Patriot Act. Predictive Analytics can represent a dynamic shift from the reactive to proactive in these areas giving an organization a jump-start on any potential downstream litigation or regulatory issue.

The ability for financial institutions to harness this immense processing and analytical power to be ahead of any potential investigation, as well as address inappropriate actors, before it becomes corporate culture is an incredible opportunity for a bank’s bottom line, investors, government and consumers as a whole.

No one expects the financial arena to become a less regulated space and as such, opportunities abound for the use of predictive technology to not only shine in the post-litigation hold eDiscovery arena, but to cut off potential litigation or investigations before they even begin. Through the use of these tools in email, instant messaging, and shared drive data stores, problems can be floated to the top before they become emergencies.

Only when the financial sector is fully able to embrace and utilize available technology will we be able to recognize the industry’s potential to shape strategy through reliable and actionable insight rather than intuition. In the coming year, one should expect to see a greater use of big data on the consumer front end as well as within compliance and legal. There is no question that analytics can enhance the use of information but the institutions that will truly succeed in the implementation will not frame this as a technological question, but rather a strategic one.