Research by McKinsey & Co has found out that companies that make
smart use of their big data also enjoy higher revenues. FILE PHOTO |
NMG
Summary
- For stock brokers, the shift to mobile and Internet-based trading is a superb door-opener but more can be done.
- Information—cash deposits and balances, trade executions, investor holding patterns, pending bids and so on—collated from these platforms, presents a big data opportunity.
- Not only can this treasure provide deep client insight, but can be harnessed to achieve several goals.
- These may include finding ways to differentiate themselves, improving client sales and retention, detecting fraud, tailoring targeted-client advice and reducing client attrition.
Football transfer season is here and one
Belgian Striker is the talk of the town. Romelu Lukaku is set to make a
switch to Manchester United from Everton for a potentially world record
$115 million – snubbing my favourite club (Chelsea) in the process.
What a terrible mistake!
Anyway, the whole circus
reminded me of an old movie, “MoneyBall”, in which an underfunded B-rate
team goes on to win the 2002 baseball championship by beating a
well-funded team with the “best fans and the best stadium”. In fact, the
team wins 19 consecutive games, tying for the longest winning streak in
American League history.
Their secret: assembling
undervalued talent using players’ data. Arguably, thanks to Oakland A’s,
big data is now a buzzword in sports and business. Sadly big data, or
extremely large data sets, has yet to firmly find its way in our capital
markets. But here’s how we can catalyse this revolution.
For
stock brokers, the shift to mobile and Internet-based trading is a
superb door-opener but more can be done. Information—cash deposits and
balances, trade executions, investor holding patterns, pending bids and
so on—collated from these platforms, presents a big data opportunity.
Not
only can this treasure provide deep client insight, but can be
harnessed to achieve several goals. These may include finding ways to
differentiate themselves, improving client sales and retention,
detecting fraud, tailoring targeted-client advice and reducing client
attrition. A push for this evolution could see brokers improve
operations, increase margins and better serve its customers. And
evidence supports this; a survey by McKinsey & Co has found out that
companies that make smart use of their big data also enjoy higher
revenues.
For research analysts, a crash course in big
data may now be necessary. Besides company filings and
price-to-earnings ratios, researchers may now need to learn how to
interpret big data in order to corroborate information from their usual
sources. Furthermore, with the new broker platforms accumulating data,
it’s certain that in the future, brokers will only hire analysts with
some data analytical skills to solve their big data puzzles.
For
this, a skill set on the usage of data sets and quantitative techniques
may soon become an added advantage for new hires. Other groups that
need to jump on this trend include investment managers, investment
banks, advisors and the exchange.
That said, challenges abound. A lot of big data is
useless and even the good stuff needs to be laboriously cleaned of
erroneous information. Its true huge data does not mean quality data.
Therefore, industry players will have to filter out these useless
information otherwise they will end up making wrong decisions. Perhaps
as a remedy, they may need to focus not on how much data they accumulate
but on how they can slice and dice the same.
In all,
big data revolution is inevitable. Through it, much vitality could be
injected into Kenya’s capital markets to help accelerate its growth.
Mr Mwanyasi is MD, Canaan Capital Limited
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