Category: Industry Trends

Key Trends Driving the Fund Industry: Movement Toward Fact-based Decision-Making


This is the second of five blog posts in our industry trends series. In this series we will look at the top five key trends driving the fund industry in 2014.

Big Data Magazine covers

“Big Data” and to a lesser extent, “analytics” have been big news over the past couple of years, but what is it really about? Leading academics and business experts suggest that Big Data and Analytics are really means to an end. Behind the headlines is the fundamental need to better understand people and the drivers that influence their behavior.

Big data is about having an understanding of what your relationship is with the people who are most important to you and an awareness of the potential in that relationship.”

Joe Rospars, Chief Digital Strategist, Obama for America

“Big Data” may be a buzzword that will fade with time, but we believe that sophisticated business analytics are here to stay. Businesses will continue looking for more efficient and reliable ways to solve problems, gain an edge, and provide additional value to customers.

Consider Netflix. Analyzing mountains of data, Netflix was able to identify a large customer segment favoring political dramas and a specific actor – Kevin Spacey. This deep understanding of their customers sparked the development of the popular Netflix series “House of Cards”. The huge success of this original programming experiment demonstrates the benefit of gaining a more complete profile of the customer.

Insights derived from customer profiles can:

  • Improve the customer experience
  • Optimize the effectiveness of your messaging and the perceived value of your services
  • Fuel the development of successful products and services

A recent IBM study found that banks and financial firms lag other industries in their ability to access and analyze multiple data types and utilize advanced data visualization techniques. Firms interested in employing data and analytics should define the business challenge at hand before worrying about data itself. The movie “Moneyball” is a helpful illustration of this. Their challenge: create a winning ball club while constrained by a modest payroll. The front-office abandoned pre-conceived notions and allowed the data to shape their decision-making. Their insight: just getting players on-base – which often doesn’t require high-priced players – dramatically improves the odds of winning ball games.

We are rapidly arriving at an “age of empiricism”, a new era in which we rely on data and analytics to replace dated decision making structures.  Technology costs and availability of skilled data scientists have been barriers to competing on analytics. These tools are now within reach, particularly for firms with core competencies in data management.

In financial services, creating and understanding customer profiles is a key starting point for using advanced analytics. A customer profile combined with an analytics-driven relevancy engine can prompt just the right action step to a telephone customer service rep.  On-line advertising can be targeted to an audience of one.

Your process might look something like this:

Turning Insights into Value

According to Matt Jauchius, CMO of Nationwide Insurance,  leading financial services firms are developing capabilities to “collect vast amounts of data on individual consumers—their consumption habits, their preferences, their interactions with the company,” allowing them to “analyze those data sets for predictive behavior and proactively apply those insights….”

Boston Financial and DST’s Global Insight Group are developing data analytics solutions to help provide this insight.  We are exploring opportunities including optimizing service delivery and workflows, advisor and shareowner profiling and segmentation, predicting and driving e-adoption, fraud detection, asset retention and call center relevancy engines.

We hope you can join us at NICSA’s Strategic Leadership Forum to discuss this further. DST’s Global Insight Group will host a breakout session on February 10: Beyond Best Practice: How to use Big Data and Predictive Analytics to Drive Sales and Marketing Performance.

Arthur Dunn

Arthur Dunn

At the end of 2014, Arthur was appointed to the position of Chief Risk Officer for Boston Financial. Since joining Boston Financial in 1981, Arthur has held a variety of operations and relationship management roles for key mutual fund and 529 plan clients. Arthur drove the development of Boston Financial and DST’s operational and systems capabilities to support 529 products. He has also played critical roles in major corporate initiatives including the establishment of IFDS-Toronto and Boston Financial’s joint effort with DST Insurance Solutions to create an Insurance BPO. Most recently, Arthur worked with DST’s Global Insight Group (GIG) to provide domain expertise and to represent business development opportunities for Boston Financial.

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