financial analytics: the game changer
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© 2010 – Proprietary and Confidential Information of FINCAD
© 2010 – Proprietary and Confidential Information of FINCAD
FINANCIAL ANALYTICS: THE GAME CHANGER
Bob Park, President & CEO, FINCAD
© 2010 – Proprietary and Confidential Information of FINCAD
The Evolution of 3rd Party Analytics
Early days:
Derivatives valuation infrastructure would not be possible without financial analytics
Widely available computing power enabled firms to take advantage of financial analytics
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© 2010 – Proprietary and Confidential Information of FINCAD
The Evolution of 3rd Party Analytics
Use of proprietary methods was prevalent
In-house development of analytics libraries created competitive advantage
Customers of banks that did not have enough resources or knowledge to build their own tools were left without a solution
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© 2010 – Proprietary and Confidential Information of FINCAD
The Evolution of 3rd Party Analytics
To meet the growing need for analytics solutions, several small firms entered the software market - FINCAD was one of them
Fast forward 20 years and the market and financial analytics have come a long way
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© 2010 – Proprietary and Confidential Information of FINCAD
The Evolution of 3rd Party Analytics
How things have changed:
Today there are a small number of globally recognized analytics vendors
Proven software and vendor stability has gained the confidence of financial institutions
Bulk of the business is not being done with proprietary methods
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© 2010 – Proprietary and Confidential Information of FINCAD
The Evolution of 3rd Party Analytics
How things have changed:
It doesn’t make sense to build proprietary analytics for non-proprietary products
Growing awareness that it doesn’t make sense to use their most expensive talent to create tools & analytics when these can be easily acquired
This misuse of resources is becoming much more obvious
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© 2010 – Proprietary and Confidential Information of FINCAD
The Evolution of 3rd Party Analytics
Current in-house analytics are costing them much more than realized due to duplication and lack of consistency
Realization that building in-house doesn’t equate to competitive advantage, therefore does not justify the costs
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© 2010 – Proprietary and Confidential Information of FINCAD
The Evolution of 3rd Party Analytics
There are now a small # of well-established vendors
The maturity of these vendors and the quality products have given firms more confidence Standardization
Straightforward integration
There are no longer any barriers to using 3rd party technology
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© 2010 – Proprietary and Confidential Information of FINCAD
Advantages of 3rd Party Analytics
More cost effective and efficient than building in-house
Products are being built by software companies More rigour applied from design, coding
and testing
Not under same pressure to respond to an opportunity in the financial markets giving time to build industrial strength solutions
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© 2010 – Proprietary and Confidential Information of FINCAD
Advantages of 3rd Party Analytics
Established companies have larger user bases so any deficiencies are identified much earlier
Frees up the “smartest” people to work on higher value areas such as risk management processes
The only way to bring normalization economically is through the use of 3rd party tools otherwise banks would in essence be setting up their own software company
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© 2010 – Proprietary and Confidential Information of FINCAD
The Direction is Clear
Summary:
Building analytics software is expensive
Up until now it's been lucrative therefore little attention to costs
Tightening margins is requiring institutions to focus on creating efficiency
Growing number of leading financial firms using 3rd party software to address their needs
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© 2010 – Proprietary and Confidential Information of FINCAD
For more information
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Please contact FINCAD:
Phone: 1-604-957-1200
Email: [email protected]
Website: www.fincad.com