How to Leverage Real-Time Streaming Analytics for Surveillance

How to Leverage Real-Time Streaming Analytics for Surveillance

This post was co-written with John Thuma and first published on the Arcadia Data website.

Banking surveillance is often fragmented in which distinct surveillance teams monitor customer interactions, electronic communications, market activity, voice recordings, building sensors, video feeds, and social media within silos. This limits the ability to spot sophisticated risk activities that cross multiple locations, lines of business, and functional areas.

Keys to a Successful Alternative Data Strategy

Keys to a Successful Alternative Data Strategy

This post was first published on the Arcadia Data website.

Asset management firms increasingly leverage alternative data to enhance their investment strategies and gain an informational edge over the rest of the market. It is becoming the normal course of business to use new types of data in alternative ways and soon “alternative data” will simply be referred to as “data.” The ability for one firm to distinguish themselves from another depends on why they selected certain data sets over others and how they enable their subject matter experts to put alternative data to use.

In our previous post, based on the report, “Put Alternative Data to Use,” by Greenwich Associates and commissioned by Arcadia Data, we considered the types of alternative data used and desired by the buy-side community, how they measure return on investment, and how deeply they analyze it.

In this post, we expand on that research to understand the approaches used by hedge funds and asset managers to select data sources and how their people use it. Finally, we respond to reported roadblocks by describing the keys to a successful alternative data strategy.

Consolidated Audit Trail: Outside Looking In

Consolidated Audit Trail: Outside Looking In

This post was first published on the Arcadia Data website.

The primary purpose of the Consolidated Audit Trail (CAT), a rule under the Securities and Exchange Act, is to arm regulators with the data they need to effectively conduct market surveillance and investigations into suspicious trading activities across all national exchanges. The difference between this and current trade reporting regimes is that it covers more than just trade data. It also requires information about the client and how the trades are broken up and allocated to their accounts which will enable regulators to understand the full life cycle of a trade and with whom it has been transacted. If your organization lacks a comprehensive and current view of all of your data and your internal surveillance processes are fragmented, you run the risk of external parties (the regulators) knowing more about your business than you do.

Hypothetical to Actionable: From CCAR to CRE Market Factors

Hypothetical to Actionable: From CCAR to CRE Market Factors

This post was first published on the Arcadia Data website.

DFAST and CCAR require bank holding companies to report, in detail, how they would respond to hypothetical market scenarios that represent macroeconomic shocks like a housing meltdown or a stock market crash. The data used by each company to predict losses and create a response plan must be actual data, not approximated. Using the commercial real estate market as an example, this post explains how a location-based BI on Hadoop solution provides analysts and portfolio managers with a flexible way to use microeconomic real estate market factors as the foundation to a robust and actionable response to regulators.

Alternative Data Strategy: How and Why

Alternative Data Strategy: How and Why

This post was first published on the Arcadia Data website.

An alternative data strategy is a collaborative, iterative, and exploratory process that is driven by domain subject matter expertise. That is our take from the research survey that we commissioned from Greenwich Associates to understand how buy-side portfolio managers, chief investment officers, and fund managers “Put Alternative Data to Use.” Our primary focus was to discover the “how” and “why” of implementing an alternative data strategy, because that is the basis from which to determine which tools and processes would work the best, and to identify the personas who would use them. Even within the buy-side community, we found that asset managers and hedge fund managers are distinct personas, and have differing perspectives on the use of alternative data.

In this part one of a two-part series, we consider buy-side perspectives as they relate to the types of alternative data being used, the measurement of return on investment, and how deep they want to get into the data.

Cross-Functional Trade Surveillance: The Keystone to a Holistic Trade Surveillance Strategy

Cross-Functional Trade Surveillance: The Keystone to a Holistic Trade Surveillance Strategy

This article was originally posted on the Cloudera VISION site.

Criminals don’t refer to a playbook of best practices to execute a crime. They are creative in their thinking and collaborative in their efforts (including with parties who may not know they are complicit) to obtain their objectives and avoid getting caught. Trade surveillance in the financial services industry must respond to their creativity and the complexities of a global trading network, the myriad of digital and physical communications, as well as social media-savvy players that develop sophisticated schemes, often converging on different forms of financial crime.

Thanks to @ArcadiaData.

Adapt to Commercial Real Estate Market Uncertainty and Capitalize on Opportunities

Adapt to Commercial Real Estate Market Uncertainty and Capitalize on Opportunities

This post was co-written with JJ Medina, Managing Director ~ Enterprise Software Solutions for Financial Services at Pitney Bowes. It was first published on the Arcadia Data website.

Commercial Real Estate (CRE) is at a risky inflection point. The rate of charge-offs (when the value of loans are removed from books and charged against a loss reserve) are essentially at zero while delinquency rates are also at a historic low (see charts below). Low charge off and low delinquency rates along with increased competition for new loan business are tempting banks to relax CRE lending standards and give out risky loans. This is a major cause for headache among regulators as the CRE market continues to overheat and property values surpass pre-bubble levels.

Democratization of Advanced Analytics

Democratization of Advanced Analytics

Co-written with Peter Memon, Managing Director – Global Head of Emerging Technology at Synechron. This article was originally posted on Synechron

Solutions to complex analytical problems often rely on the craftsmanship of highly-specialized experts in data science, machine learning, and other branches of artificial intelligence.  The extent to which advanced analytics creates business value today is still limited (especially for businesses like financial services) because of a few key reasons, all of which also drive up the cost of monetizing a company’s data in the end. 

Maintain the Edge With Alternative Data

Maintain the Edge With Alternative Data

This post was co-written with Richard Harmon Ph.D., Director, EMEA Financial Services at Cloudera.

A growing number of asset management firms have been integrating alternative data sources with conventional market data, enriching trading strategies with additional insights as a means to gain an informational advantage and an edge on the rest of the market. But the informational advantage that can be gained through the use of alternative data will diminish as those sources become generally understood and adopted. To avert this alpha decay, it is critical to understand how alternative data will contribute to your strategy and make certain that it is applied for the right reasons.

Active management is fundamentally about uncovering opportunities before they are priced in by the broader market. Over the past 5 years a growing number of asset management firms have been integrating alternative data sources with conventional market data, enriching trading strategies with additional insights as a means to gain an informational advantage and make more informed investment decisions in order to get an edge on the rest of the market.

The informational advantage that can be gained through the use of alternative data will diminish as those sources become generally understood and adopted. In other words, the alpha decays at an accelerated rate as more firms process and analyze similar alternative data sources. But if your competitor’s implementation is poor, no ground is lost.

To avert alpha decay, it is critical to understand how alternative data will contribute to your strategy and make certain that it is applied for the right reasons (fit for purpose). It is also critical to ensure the integrity of the underlying data and to optimize the models that use it, thus accelerating an informed decision-making process.

This post was first published on TabbForum.

Monetize Data Assets for the Alternative Data Economy

Monetize Data Assets for the Alternative Data Economy

The alternative data economy provides an opportunity for organizations to create new revenue streams by repurposing their data assets for the financial services industry. This post is geared to organizations that are evaluating their place in the alternative data ecosystem as originators of data. It describes how to position data assets in a way that enables prospective users to access it, assess its quality and put it to use, creating new value.

This post was first published on the Arcadia Data website.

Navigate the Alternative Data Ecosystem

Navigate the Alternative Data Ecosystem

Alternative data for financial services, such as satellite imagery, logistics data, and social media feeds, has been getting a lot of attention recently. Like any trending topic, its uses and benefits can be hyped up a bit but if the right plumbing and creativity is in place, those benefits can be realized. This post helps to understand the plumbing by describing the component parts of the alternative data ecosystem. This framework will help you to navigate your way from an inkling of an idea to an actionable strategy while the window of opportunity is still open. See the webinar, “Put Alternative Data to Use in Capital Markets” for a demonstration of this process.

This post was first published on Arcadia Data’s website.

How to Efficiently Put Alternative Data Sources to Use

How to Efficiently Put Alternative Data Sources to Use

Alternative data sources for financial services has been getting a lot of attention recently. Like any trending topic, its uses and benefits can be hyped up a bit. Much of the attention has been around creating trading strategies with an edge (generating alpha). But it also applies to risk management and enhanced regulatory oversight. To better understand the utility of alternative data, this post presents the topic within a larger context that will help to put alternative data sources to use in the most efficient and practical manner possible.

This was first published on the Arcadia Data website.

Visual Big Data Analytics for Trade Surveillance

Visual Big Data Analytics for Trade Surveillance

In order to fully demonstrate that their policies and procedures comply with regulatory requirements, financial services organizations must use information that goes beyond traditional data sources. Trade surveillance exemplifies this because alternative data sources are needed to provide a deeper understanding of the intent of trade activities. This post describes how visual analytics can provide compliance officers with actionable insight that will enable them to identify and investigate events more efficiently and establish a robust and defensible process across their enterprise.

This was first published on the Arcadia Data website.

Visual Analytics for Fundamental Review of the Trading Book

Visual Analytics for Fundamental Review of the Trading Book

The revised standards for minimum capital requirements, as laid out by the ‘Fundamental Review of the Trading Book,’ exemplifies the heightened regulatory expectations for the granular validation of risk models. This post describes visual analytics capabilities that will enable organizations to make the most of a data-driven regulatory program and establish a robust and defensible process across the enterprise.

This was first published on the Arcadia Data website.

Great Proof of Concept! Now What?

Great Proof of Concept!  Now What?

Great feats of innovation can die a slow and unremarkable death if they are not adopted by the organization.  Adoption requires a comprehensive approach to integration that recognizes the importance of how people work as well as a sound, technical implementation.  By keeping the solution simple and promoting the value of that solution through broad community feedback, you can maximize the adoption of innovative solutions across the organization.

A "How-To" Manual for Innovation

A "How-To" Manual for Innovation

A "How-To" manual can be derived from the biography of a man who automated large scale drafting, revolutionized the apparel industry, and standardized printed circuit boards.  There are many parallels with what we see today as we experience the next level of automation through artificial intelligence. 

Ambassador Gregg Meets the Cub Scouts

Ambassador Gregg Meets the Cub Scouts

Donald P. Gregg, Chairman of the Pacific Century Institute and former Ambassador to South Korea, National Security Adviser to Vice President H. W. Bush, and CIA Chief of Station throughout Asia met with the 3rd grade Cub Scouts of Pack 94 in Armonk, NY.