Big Data Drives Competitive Advantage

Over the past several years some of the innovations treasury and cash management staff have focused on relate to mobile banking or enterprise resource planning (ERP) integration. When asked about the next big thing for 2012, for example, one banker at a large multinational bank said that mobile banking in multiple languages could be a key development over the next year. True, mobile and treasury systems continue to be important. Yet the leaders are going beyond these developments, which are by now some of the basic tools for competitive advantage.

Over the coming year, and even longer, one of the key trends for treasury and cash management is likely to be around customer analytics and business intelligence. In particular, companies that use ‘big data’ can effectively gain a competitive advantage.

With increasing amounts of data available and a need to use it to drive strategy, analysing all that data well is becoming increasingly important. The concept of effectively leveraging big data, the massive amounts of data held in multiple places in the company, is becoming increasing important.

In looking at key trends for the year ahead, for example, IDC forecasts that “real value will be derived from the high-end analytics that can be performed on the increasing volumes, velocity and variety of data that organisations are generating – or ‘big data’ analytics.” Similarly, consulting firm McKinsey said in its recent study on big data that “we believe big data may well become a new type of corporate asset that will cut across business units and function much as a powerful brand does, representing a key basis for competition…Success will demand not only new skills but also new perspectives on how the era of big data could evolve.”

While much of the focus so far for has been on leveraging data for marketing, data will become even more vital for treasury and cash management professionals as well. When SWIFT recently developed its goals for a more customer-centric banking model, for example, it said in its new whitepaper on correspondent banking 3.0 that “enhanced business intelligence services to better identify new market opportunities, understand end-customer behaviour, and better monitor liquidity” would be a key project for the organisation this year.

For chief financial officers (CFOs), IDC said that they are “confronted with the need to have better insights in order to improve cash flows and productivity, as well as trying to distribute resources in the most efficient manner. IDC believes that the need to accelerate growth and revenue, while cutting overall expenses and efficiently managing risk, will drive business analytics use in the CFO’s office across the region.”

For treasurers in particular, SunGard says one of its top 10 trends in 2012 is that “treasurers are increasingly seeking up-to-date, enterprise-wide views of foreign exchange (FX ) and interest rate risk positions with real-time debt and investment reporting.” Using big data can enable this enterprise-wide view.

Along with using data itself well, obtaining it fast enough is also important. As Cordys managing director Richard Helliar wrote in gtnews earlier in the month, “the ability to access data and process it in real time is crucial to making key liquidity decisions.” Banks and corporates that can analyse and leverage data faster can indeed increase their competitive advantage.

While some banks and corporates may still be looking at how to make data available, gaining a competitive advantage over the coming year seems more likely to come from the ability to analyse big data both quickly and effectively rather than from just accessing more information. While big data may not yet have been on the radar screen for many, it’s likely to rise in importance quickly over the coming months.


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