Mar 20, 2014
This is part 1 of a series of posts we promise will offer some tangible examples of how big data is truly shifting and transforming business models…so here we go…
Payments is one of the biggest industries in the world – measured both in terms of revenues (>$900B) and/ or profits (~>$200B). Not only is it the grease that facilitates efficient, seamless and transparent commerce, globally, it is also the only realtime measure of risk.
Yet, the data produced in copious volumes by all the participants in a payments value chain has, historically, been under-analyzed (and hence under-monetized). While the Banks realize that they may potentially be sitting on the richest data set that exists to predict customer behavior, they also have been unable to justify the hundreds of millions of dollars needed to mine for that gold. Not to mention the advanced algorithms to collect, curate, compute and convert the insight have simply not been available.
All that is set to change. Over the last several months, Tresata has deployed its predictive analytics engines at one of the largest and biggest Financial Services institutions that also lays claim to be the premier payments processor in the world, both for consumers and large corporates.
They had the foresight to identify their corporate payments franchise as a unique asset with unlimited scope to mine for insights that not only provides them a better view of global risk, but could also allow for completely transforming how corporate credit is analyzed, priced and managed. Let’s be clear, as they roll out Tresata-powered predictive data insights across there corporate banking businesses, the potential upside is neither in the millions nor hundreds of millions… but billions. More importantly, when fully implemented across their suite of banking products, it WILL revolutionize the very definition (and by consequence the revenue and profits) in the corporate credit and payments businesses.
And yes, this is already working today. By picking (via a competitive vendor process) Tresata’s advanced machine learning powered analytics applications that have been designed to run IN Hadoop (the planets best computational technology) and come out-of-the -box ready to be deployed against any kind of financial data, this Institution paid for the entire multi million dollar license for our application when its Bankers closed one deal in Europe.
How is that possible you ask – the answer is something we have shared (bared) multiple times. We fundamentally believe that the value in big data enterprise software is at the business end of the continuum – by using all the data at an Enterprise’s disposal to find insights that solve a business problem…that could not be solved before. The only way that can be pulled off is when you combine and apply advanced analytical & machine learning techniques that automate the application of context to the data…something that can be (and has been) achieved only when you have pulled off the Predictive Analytics trifecta – combination of technology, science and domain. That concoction defines the core of what Tresata has been working on for the last three years, with remarkable success (which our customers remind us of everyday).
The reasons why it is hard to pull off and took us some time as well are simple:
(1) we made a big bet to have all our advanced analytics techniques run in Hadoop, and no other technology;
(2) we chose to specialize in financial data, and
(3) we sell to business leaders who have business opportunities that can benefit from predictive analytics and big data today
#1 was based on a prediction we made 6 years ago that Hadoop will be the tour de force and defacto standard for data analytics – we even coined a term to refer to it 6 years ago (which a lot of smart people use now ), “Data Operating System.” And unfortunately it has taken more time than we thought (don’t ask me why…the market is the greatest leveler) to have in production Hadoop clusters at major Financial Institutions – in the Top 50 global FIs (yes we have spoken to all of them), while 100% of them have played with Hadoop, no more than 10% have Hadoop ‘in production’.
#2 we thought was common sense. It is not feasible to build analytics applications that ACTUALLY “monetize big data” (a term we have since trademarked) unless you have a deep understanding of the data (and the domain it’s from) itself. Any self-righteous, honest quant (or data scientist as they call them in silicon valley) will tell you that (i know honest quants are rare finds). Why more have not followed this path befuddles me personally, yet makes me incredibly proud and happy professionally (tresata can continue to own and define the market around financial data and advanced analytics apps built in Hadoop while our peers recreate the old data stack in hadoop).
#3 was the easiest to pull off given our history as practitioners, developers and leaders in the Banking industry.
While we would love to share with you the name of this client, the exact details of what we did and how they monetized the insight, we value discretion a little more than some of our esteemed peers in this space. We draw pride in the fact and knowledge that we were able to solve a problem in the corporate payments space that has been on the strategic agenda of every Financial Institution worth their salt in the corporate payments and transaction service business for the last 15 years. We are glad that one of those players has finally solved it using our software. And we read with pride every story in a book or an article that recounts this application of big data, which we know our software powers (yes they have made it public through other references).
More importantly, we are committed to dispel any disillusionment ‘troughs’ anybody is feeling on whether big data can be monetized beyond making data storage cheaper (what a disservice new age big data companies are doing to the world by labeling Hadoop a storage platform…Doug Cutting should be pissed) or having people click on ads.
Big data will transform banking…I said it 7 years ago, staked my career on it and am proud of the Clients Tresata is already helping define that future.
The bigger question is – which of the current players will lead that transformation or wait for their mortal fears to come true. We can confirm that the race to find unbeatable competitive advantage has begun.
PS – if you decide that starting to monetize payments data is up your alley, firstname.lastname@example.org can help…