Is “Big Text” next big thing? Text analytics can reveal even more about customers

From Banking Exchange -

“Move over, Big Data. Here comes Big Text. Or, as it’s more commonly known, “text analytics.” Or, sometimes, “text mining.”

Essentially, it’s the analysis of all the unstructured data a bank absorbs through email; social media posts; call center notes and transcripts; surveys and feedback forms—any information provided by or about customers not structured in some type of database.

More specifically, it could be a snarky comment on Facebook; the jottings of a call center representative; scribbled notes at the end of a survey; or a mobile text from a grateful customer to a helpful teller.”

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Is It Time to End Screen Scraping?

From American Banker

“As the industry works to improve the way online banking information is shared with personal financial management apps, a debate is brewing over whether to end the decades-old practice of screen scraping.

Proponents of the popular method say it is a valuable supplement to direct data feeds that may be incomplete or out-of-date. But screen scraping also raises risk concerns, since like other data collection methods it requires consumers to cough up their banking credentials.’

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Raincoats, taxis and the future of banking

From Banking Technology

“What do taxis, the weather, mobile wallets and raincoats have in common? They are all potential variables in determining a person’s daily spend – and they provide a great opportunity for banks to use data to save customers money, according to Aman Narain, global head of digital banking Singapore at Standard Chartered.

Narain is an enthusiastic early-adopter of every mobile financial technology under the sun. Having joined the bank in 1999, he has worked in investor relations, strategy, corporate development and technology and operations, and has a keen eye for some of the latest trends – including wearable technologies and the ‘internet of things’. However, he is also a vocal critic of many of the solutions out there today.”

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The Empty Promise of Big Data

“Aite Senior Analyst Ron Shevlin knows a thing or two about data analytics. He’s crunched numbers in the banking industry for 20 years, and he says financial institutions should purge the term “big data” from management discussions. Here Shevlin outlines three reasons financial marketers should dodge the “big data” trap.” <<READ MORE>>

European Commission sets out technology-driven action plan for derivatives trading

I am always concerned when we try to solve our problems (or simply wish them away) by invoking “technology” as the panacea. So seeing the headline “European Commission sets out tech-driven action plan for derivatives trading” on an e-mail alert from Finextra brings to mind all the previous misguided attempts to solve everything by throwing technology at it.

(Please click on the Post Title to read the article)

We have previous attempts to manage operational risk by “mining” historic loss data (which often did not exist in digital form anyway) and using this as an indicator of the future losses or the over reliance of VAR. Interestingly, Pablo Triana in his book “Lecturing Birds on Flying: Can Mathematical Theories Destroy the Financial Markets?” aptly compares VAR to a passenger airbag that works only 95% of the time; unfortunately the other 5% includes the time when the driver is involved in an accident.

In dealing with Money Laundering we really threw the baby out with the bathwater when we abrogated the requirement to “Know your customer” from a real personal knowledge of who your customer was and what his business really was about to the technologists black box and the modern alchemist’s book of formulae and often erroneous suppositions.

I most certainly agree that derivatives and credit default swaps have created a web of mutual dependence that makes it difficult to understand, disentangle and contain risk in the immediate aftermath of a default. I am all for using technology to improve the situation.

However, I do really fear that unless we really have a clear understanding of the derivative practices and processes and the potential implications, throwing all this technology at it could end up as a huge waste of money.