Big Data Risks and Obstacles for Financial Institutions
One of our Regional Systems Architects, recently wrote an article that appeared at Wall Street & Technology: When it Comes to Big Data, Do the Benefits Outweigh the Risks? In it, he defines Big Data, describes how it gives financial institutions a competitive advantage, and outlines some risks associated its use. Leveraging the insights you can garner from Big Data is worth any inherent risk, so it’s worth reviewing these risks again.
Here are they are. They’re worthy of scrutiny—given their potential for consequences—but if managed appropriately in advance, they can be overcome.
- Data loss or breach of security – Financial institutions in particular house data that, by its very nature, contains information of particular value. Thieves often target this data, but what’s even more troubling is how it’s handled. Lost laptops containing data, whether encrypted or not, are easily lost, stolen or otherwise compromised. Institutions should have proper security-related technologies in place to prevent intrusion, and they should also have well thought-out policies in place with the means of policing them.
- Regulatory compliance – As any financial institution will tell you, the SEC and federal government have strict guidelines in place for how to store data and for what length of time. Yet at the same time, keeping data too long becomes a security risk. The benefits of analyzing older data for things like trends and patterns must be weighed against the added risks of keeping it beyond the required time.
- Data and Storage Management Costs – When we start thinking about the amount of data being stored for many financial institutions, you start getting into the terabyte range, which means a hefty price tag for data and storage management. Factor in multiple office locations, disk space, Internet connectivity, required bandwidth, and you start getting into hundreds of thousands of dollars. Is there a return on this investment with Big Data?
The author concludes in his article:
It's clear that technology can help improve the performance of financial institutions through the analysis of big data. Improved customer segmentation and identification of industry trends can greatly enhance competitive advantage. While there are always issues with utilizing new forms of technology, it's clear that the benefits outweigh the risks when leveraging the information learned from big data.
Big Data is only getting bigger, so analyzing your return on investment is your starting point. But remember it’s competitive out there, and there’s gold in successful Big Data analysis.