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The Four Pillars of Big Data for Wealth Management

Published
  • May 23 2013, 12:14pm EDT

May 23, 2013 – Wealth management firms are beginning to find four particular areas of interest and strength when it comes to big data, according to a new industry review by researchers at Celent.

For the wealth management industry, Celent found the four most important big data implementation areas as:

  • Investment research: to discover, develop and test investment ideas and strategies, especially with improving algorithmic trading.
  • Customer knowledge: aggregating and combining in-house and external, sometimes unstructured data sources for that sought-after “unified view” of the customer, as well as using advanced analytics to improve customer and advisor service, and increase retention or sales opportunities.
  • Risk management: to analyze and manage new and changing regulatory reporting requirements, in real or near real time.
  • Compliance and monitoring: in line with risk management, using a larger data analysis dragnet to uncover violations, with a goal of portfolio upkeep on a daily basis rather than a messy audit down the road.

As seen in other industries, wealth management firms are looking to big data solutions for new avenues for bringing in and analyzing customer data, wrote Celent Analyst Bill Fearnley, Jr.
“With the availability of new open source Big Data tools such as Hadoop and NoSQL, firms are interested in capturing unstructured data as well as web and social media content, including tweets and other social media postings and content. Firms want to capture the relevant details and sentiment of this data and add it to their existing client, advisor, and prospect profiles,” Fearnley, Jr. wrote.

The strongest drivers in investment related to big data in the report were in analytics, led by banks and full-service brokers. To a lesser degree, banks and full-service brokers are also investing in new capabilities around data capture and visualization. Self-directed brokers and registered investment advisors had marginal investment across various capabilities touching on big data, according to Celent. The leading front-office area of investment related to big data was related to linking customer and prospect data to a money managers’ CRM system, with analytics, capture and visualization related to trading also a leading source of investment. There were lower reported investments in new or updated big data capabilities for back-office functions, though Celent found the highest interest in risk management, and compliance and monitoring.

On the vendor side, Celent noted QlikTech as the lone vendor with big data capture, analytics and visualization capabilities across eight wealth management operations areas, with Oracle and Actuate also representing strong portfolios for the market.

The new report, entitled, “Big Data in Wealth Management: the Search for Customer Insight,” provides a high-level gauge of how money managers are investing in capabilities for data capture, advanced analytics and visualization.

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