The Crucial Role of Information in the New Financial Sector
Data is a powerful source of information. This statement is frequently mentioned, but what does it really imply, and how can information be empowering and significant in what we refer to as the "New Financial Sector"?
Over the past few years, the financial sector has undergone significant transformations due to increased investment in non-presential channels, advancements in technology, competition from emerging market players, and the introduction of robotic advisory services resulting from such advancements.
One of the main drivers of this transformation has been the ability to organize, analyze and transform data into information and knowledge. In essence, obtaining insights about market trends, customer behavior, and risk management from data.
Conversely, advancements in the financial industry have significantly elevated the intricacy of information systems, either through the emergence of more products and services (many of them with high levels of sophistication), new distribution channels, or through regulation.
This new context, combined with the urgencies and requirements imposed by the market, competitors, and customers, forced institutions to adopt new solutions that, at each moment, were considered the most appropriate. However, the need for urgent response often led to the adoption of heterogeneous solutions that created data silos and information dispersion.
Financial institutions face numerous challenges in leveraging data. First, the ever-increasing pace of data generation, fueled by sensors present on multiple devices, increasingly sophisticated content creation, and 5G communications. There is expected to be 175 ZB of information by 2025.
Second, the diversity of content requires handling structured, semi-structured, and unstructured data. Third, data quality is crucial, as without proper Data Governance policies, the information in databases can become obsolete, irrelevant, or of poor quality. Finally, institutions must consider regulation and security, distinguishing between sensitive personal data and general data and creating different layers of security around the information in compliance with data protection laws.
Financial institutions that can effectively address these challenges will be in a powerful position to make informed investment decisions, manage risks, and identify new business opportunities. To achieve this, these institutions should prioritize investments in data architectures and sophisticated data analysis tools that utilize advanced algorithms to analyze market trends and identify investment opportunities. Additionally, they should engage qualified professionals and create multidisciplinary teams to leverage processed data.
Undoubtedly, the role of information is crucial in the new financial sector. The institutions that can extract, analyze, and leverage data effectively are in the best position to innovate and create value for themselves and their customers. Therefore, investing in technology, talent, and strategic partnerships is crucial to unlocking the "power of information," staying competitive, and dominating the market.
