Financial Analytics: The Game Changer

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Transcript of Financial Analytics: The Game Changer

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2. FINANCIAL ANALYTICS:THE GAME CHANGER Bob Park, President & CEO,FINCAD 3. The Evolution of 3rd Party Analytics

  • Early days:
  • Derivatives valuation infrastructure wouldnot be possible without financial analytics
  • Widely available computing power enabledfirms to take advantage of financial analytics

4. The Evolution of 3rd Party Analytics

  • Use of proprietary methods was prevalent
  • In-house development of analytics librariescreated competitive advantage
  • Customers of banks that did not have enoughresources or knowledge to build their owntools were left without a solution

5. The Evolution of 3rd Party Analytics

  • To meet the growing need for analyticssolutions, several small firms entered thesoftware market- FINCAD was one of them
  • Fast forward 20 years and the market andfinancial analytics have come a long way

6. The Evolution of 3rd Party Analytics

  • How things have changed:
  • Today there are a small number of globallyrecognized analytics vendors
  • Proven software and vendor stability hasgained the confidence of financial institutions
  • Bulk of the business is not being done withproprietary methods

7. The Evolution of 3rd Party Analytics

  • How things have changed:
  • It doesnt make sense to build proprietaryanalytics for non-proprietary products
  • Growing awareness that it doesnt makesense to use their most expensive talent tocreate tools & analytics when these canbe easily acquired
  • This misuse of resources is becoming muchmore obvious

8. The Evolution of 3rd Party Analytics

  • Current in-house analytics are costing themmuch more than realized due to duplicationand lack of consistency
  • Realization that building in-house doesntequate to competitive advantage, thereforedoes not justify the costs

9. The Evolution of 3rd Party Analytics

  • There are now a small # of well-establishedvendors
  • The maturity of these vendors and the qualityproducts have given firms more confidence
    • Standardization
    • Straightforward integration
  • There are no longer any barriers to using3 rdparty technology

10. Advantages of 3 rdParty Analytics

  • More cost effective and efficient than buildingin-house
  • Products are being built by software companies
    • More rigour applied from design, codingand testing
    • Not under same pressure to respondto an opportunity in the financial marketsgiving time to build industrial strengthsolutions

11. Advantages of 3 rdParty Analytics

  • Established companies have larger userbases so any deficiencies are identifiedmuch earlier
  • Frees up the smartest people to workon higher value areas such as riskmanagement processes
  • The only way to bring normalizationeconomically is through the use of 3 rd partytools otherwise banks would in essence besetting up their own software company

12. The Direction is Clear

  • Summary:
  • Building analytics software is expensive
  • Up until now it's been lucrative thereforelittle attention to costs
  • Tightening margins is requiring institutionsto focus on creating efficiency
  • Growing number of leading financial firmsusing 3 rdparty software to addresstheir needs

13. For more information Please contact FINCAD: Phone: 1-604-957-1200 Email: [email_address] Website: