Financial services firms are overlooking insight that could transform their businesses because as little as three per cent of them are using machine learning to analyse their unstructured data, new research has found.
While firms are increasingly using ML to analyse their structured data, the huge potential of unstructured data remains untapped. That is the finding of Cloud Technology Solutions’ report, The Future of Finance: How ML Will Disrupt Britain’s Biggest Industry.
Unstructured data includes audio, video and email files and accounts for around 80 per cent of the data that financial services firms hold.
An independent survey of senior IT decision makers in financial services which provides the basis of this report, shows that almost all firms are failing to utilise this data, which could be used to uncover key insights and create a point of difference against the competition.
The report explains that this could include predicting trends and improving customer experience more effectively through automation.
Ryan Stewart, financial services lead at Cloud Technology Solutions, said: “Data-led insight is increasingly vital across financial services. We’ve seen a lot of digital disruption in the industry, with challenger banks like Monzo and Starling Bank entering the market, and this has put significant pressure on the largest firms to rethink their operations and improve services to retain market share.
“Increasingly, firms are recognising that the ability to collate, store and analyse big data is essential – and that ML is key to unlocking business insights from this data that can help them outsmart the competition.
“Our research shows that, while we are seeing increasing use of ML across the industry, there is still a huge opportunity for financial services firms to gain more benefits from their data. Unstructured data accounts for most of the data financial services firms hold, yet many are not harnessing its potential at all using ML. This means ambitious and agile financial services organisations are uniquely placed to steal a march on their competitors and unlock new insights that could have a transformative effect on how they do business.”
The report, which outlines how ML can help financial services firms better analyse their data to decrease risk, improve customer experience and reduce fraud, shows there has been some uptake of ML in the sector.
ML is being used to analyse structured data, such as names, addresses and credit card numbers, with 75 per cent of those surveyed said they were using the technology as part of their data strategy.
However, 62 per cent said they were not using ML holistically across their businesses. Instead, its introduction appears to be piecemeal with 57 per cent of respondents saying ML is being used by their IT department and 32 per cent saying their risk unit is using ML.
The survey also shows that the current top use of ML in the sector is to tackle regulatory compliance, with 73 per cent using the technology in this area.
Ryan added: “The financial services industry is on the precipice of a revolution in data and insight. We’re already seeing the market diverge between firms that are embracing technology and data to drive their business forward and those which are lagging behind.
“As firms begin to use ML to analyse unstructured data the gap between firms will widen further still. Those who fail to embrace this opportunity risk being left behind while their more agile and innovative competitors move way ahead.”
CTS is Europe’s largest full-stack Google Premier Partner and works across the financial services industry to help businesses improve harness the potential of data and ML.