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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: www.fincad.com