The hype surrounding Big Data use far exceeds its actual prevalence, according to a new report from Celent.
Among financial services firms with hands-on experience, however, Big Data holds big promise, according to the new report, “How Big is Big Data: Big Data Usage and Attitudes Among North American Financial Services Firms.”
"Insurers interviewed generally didn't identify with the ‘big’ in Big Data, citing that volume was not their challenge," says Craig Beattie, senior analyst with Celent's Insurance Group and coauthor of the report. "But Big Data technologies are enabling them to address variety and velocity issues."
This report begins with a review of how North American financial institutions understand and value Big Data and data analytics. This includes where insurers expect to see activity and how the investment in Big Data will show up. The report explores the level of experience financial institutions have with Big Data, the technologies employed, and results achieved. It then examines how Big Data is impacting organization, culture, and decision-making in financial industry firms and concludes with a discussion of the barriers to success: both perceived and real.
Key findings of the report include:
- Firms not yet experimenting with Big Data need to be. There is significant activity surrounding Big Data among surveyed firms, but the activity has not yet resulted in live implementations, except for a small minority of larger institutions. Most respondents characterized their firm as immature in its understanding and use of Big Data. Most North American financial institutions are still getting their arms around the topic and are quick to concede significant gaps in their leveraging of "little data" to its fullest, much less Big Data.
- Big Data remains trendy and ill-defined. In the absence of a broadly embraced definition, attitudes vary about Big Data. Firms with hands-on experience are more bullish about Big Data and the value it can provide.
- A majority of firms (60 percent) maintain that information (including Big Data and analytics) holds the key to competitive advantage to a significant extent. A surprising number (nearly 40 percent), however, assert a small to moderate influence on competitive advantage.
- Despite the explicit importance of data and analytics competency, a minority of surveyed insurers (20 percent) have hands-on experience with Big Data in a production environment. An equivalent percentage has pilot initiatives in place, often more than one. The bulk of experience lies with projects aimed at improving sales results or reducing risk/fraud.
- Big Data experience is closely tied to the value placed on data and its ability to derive competitive advantage. Early-adopters are those embracing a competitive advantage by doing so. Among financial institutions with longevity of experience (more than one year), 70 percent of projects have met or exceeded business case expectations. For these institutions, the promise of Big Data is very real.
- Barriers to success are many, with lack of technical expertise and analytic talent key among them. Deriving compelling value from Big Data thus requires deliberate and sustained effort.
Bob Meara, a senior analyst with Celent’s Banking Group, co-authored the report.