Improve Financial Services with Event Stream Data

Analyst Viewpoint

Streaming data will be transformative to the future of financial services organizations. It can provide the critical, timely information needed to deliver world-class customer service, detect and prevent fraud, tie together disparate legacy systems or power new services and sources of revenue. In the past, most financial services systems had a transaction-oriented approach; each interaction with a customer was a single transaction or interaction (for example, a bank deposit). Today, financial services organizations—and all organizations—need to understand the entirety of current and historical interactions with a customer to meet their expectations. In addition to a deposit or loan transaction with a core operational system, the complete picture might include mobile banking, website interactions, calls to customer service and social media posts about your products or services.

Our research shows that nearly all financial services organizations (97%) consider it important to accelerate speed the flow of information and improve the responsiveness of the organization. Even just a few years ago, capturing and evaluating this information quickly was much more challenging, but with the advent of streaming data technologies that capture and process large volumes of data in real time, organizations can quickly turn events into valuable business outcomes in the form of new products and services or revenue. Our research involving a broad cross-section of financial services organizations shows that more than half of those organizations (55%) are using their event streams to identify organizational or revenue producing improvements. And nearly half (45%) are developing new products or services.

Nearly every financial services organization still has employees that interact with customers. To provide the type of service customers expect, these employees need immediate access to a 360- degree, up-to-date view of the entire relationship with the customer. Since many financial services systems are based on legacy technologies that are not easily modified or integrated, streaming data can provide the glue that takes information from disparate systems such as retail banking, loan processing, and credit cards, and can combine it with mobile banking and website activity without requiring any modification of the existing systems

Streaming event data enables a paradigm shift in financial services customers’ experiences. They have come to expect the ability to receive alerts and notifications from their financial services providers. The alerts can range from simple threshold-based values (such as a low balance notification) to unusual transaction activity (such as potential fraud or duplicate charges). They may be related to executions of securities trades or activity of securities on a customer’s “watch lists.” Streaming data forms the backbone for both triggering the alert and delivering the alert to the customer in real time.

Detecting fraud quickly and preventing it is another natural use case for streaming data. Real-time data is essential to preventing fraud rather than detecting it after-the-fact. Data from all systems must be collected and evaluated in real time to ensure that multiple transactions are not being executed simultaneously against different systems within the organization. Real-time updates to asset balances and credit scores can help identify fraudulent credit applications.

And as fraud schemes become increasingly sophisticated, financial services organizations must consider all the information available to them in real time from various systems and sources. For example, if an employee’s identity is being used to approve a withdrawal of funds from a system at a particular location yet that employee’s mobile phone indicates they are in a different location, it suggests suspicious activity that should be examined further. If a customer’s transaction history for withdrawals are typically from a different location or for significantly smaller amounts than a current withdrawal, it might also be worth further review before completion.

Streaming data can also provide critical, timely information to help financial services organizations with their risk management and compliance obligations. Portfolio exposure by geography and industry concentration is constantly changing. Assets are continuously being committed to new exposures. Gathering all this information in real time for a complete and up-to-date picture is important to accurately assess the organization’s value at risk in real time. Combining real-time event streams with historical data also enables financial services organizations’ compliance with the various regulatory frameworks to which they are subject, such as Comprehensive Capital Analysis and Review, Fundamental Review of the Trading Book, the Basel Accords and others.

Financial services organizations have many opportunities to exploit real-time streaming data to transform their operations and improve their bottom lines, and our research shows they are using event data to increase revenues and reduce costs. Some of these uses represent new products and services designed to enhance your customers’ experiences, while others represent ways to access more timely and consolidated information from your existing systems. In either case, to be competitive in today’s financial services market, your organization needs to embrace streaming data and the benefits it provides.