Financial Analytics: The Game Changer


FINANCIAL ANALYTICS: THE GAME CHANGER

Bob Park, President & CEO, FINCAD


The Evolution of 3rd Party Analytics

Early days:

Derivatives valuation infrastructure would not be possible without financial analytics

Widely available computing power enabled firms to take advantage of financial analytics

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Use of proprietary methods was prevalent

In-house development of analytics libraries created competitive advantage

Customers of banks that did not have enough resources or knowledge to build their own tools were left without a solution

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To meet the growing need for analytics solutions, several small firms entered the software market - FINCAD was one of them

Fast forward 20 years and the market and financial analytics have come a long way

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How things have changed:

Today there are a small number of globally recognized analytics vendors

Proven software and vendor stability has gained the confidence of financial institutions

Bulk of the business is not being done with proprietary methods

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How things have changed:

It doesn’t make sense to build proprietary analytics for non-proprietary products

Growing awareness that it doesn’t make sense to use their most expensive talent to create tools & analytics when these can be easily acquired

This misuse of resources is becoming much more obvious

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Current in-house analytics are costing them much more than realized due to duplication and lack of consistency

Realization that building in-house doesn’t equate to competitive advantage, therefore does not justify the costs

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There are now a small # of well-established vendors

The maturity of these vendors and the quality products have given firms more confidence Standardization

Straightforward integration

There are no longer any barriers to using 3rd party technology

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Advantages of 3rd Party Analytics

More cost effective and efficient than building in-house

Products are being built by software companies More rigour applied from design, coding

and testing

Not under same pressure to respond to an opportunity in the financial markets giving time to build industrial strength solutions

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Advantages of 3rd Party Analytics

Established companies have larger user bases so any deficiencies are identified much earlier

Frees up the “smartest” people to work on higher value areas such as risk management processes

The only way to bring normalization economically is through the use of 3rd party tools otherwise banks would in essence be setting up their own software company

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The Direction is Clear

Summary:

Building analytics software is expensive

Up until now it's been lucrative therefore little attention to costs

Tightening margins is requiring institutions to focus on creating efficiency

Growing number of leading financial firms using 3rd party software to address their needs

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For more information

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Please contact FINCAD:

Phone: 1-604-957-1200

Email: [email protected]

Website: www.fincad.com

Financial Analytics: The Game Changer

Business

Transcript of Financial Analytics: The Game Changer