MicroStrategy: big data, big ambitions – Geert Massa
Post-crash regulations like Basel III, Solvency II and Dodd-Frank are forcing many financial institutions to rethink their position on risk management. Finding better ways of monitoring the quality of financial assets and interacting more transparently with industry regulators are at the top of the agenda in the aftermath of the economic crisis.
Businesses that want to stay compliant will need to look more closely at the way they manage data. The finance sector is already required to follow huge flows of trade data, a pressure the new legislation will only amplify. For international companies spread over multiple channels, calculating total risk exposure is not easy, but as Geert Massa, VP of strategic development at MicroStrategy explains, it's an operational necessity.
"With these regulations, a lot of organisations are having a problem with aggregating their data and bringing together single views," he says. "Multinational organisations with a lot of branches carry a variety of specific risks: credit cards, mortgages, personal loans, car loans and so on. Creating a quick, over-arching risk framework can be difficult in a context like that."
Consolidating business data at both regional and central levels is needed for companies to have a full picture of their risk exposure, but most business intelligence vendors offer only one of the two. That's an unsatisfactory compromise for chief risk officers whose job requires knowing as much about their business as possible.
"Unlike most providers, at MicroStrategy we do both," Massa says. "Banks can drill down on specific problems, say a red light on mortgages, and look at the separate entities. But they can also zoom out and view the position of the wider enterprise. With the same solution, we can provide two very different aspects of risk exposure. That kind of consolidated IT platform is unique for the market and we see a lot of added value for the financial sector as a result.
"We don't say we have a full-blown Basel III solution though. What we do say is that with our solution you are Basel III-compliant. And that's a totally different point of view. We don't believe that financial organisations are going to buy a complete solution - they're looking for a framework that can help them reduce their exposure, comply with regulations and do something useful with the information."
Data access and manipulation
Accessing and manipulating data from a range of seemingly inaccessible sources gets right to the heart of what MicroStrategy does. In some cases, that means consolidating data from siloed companies, but in many instances, it's about finding information in new areas. Social media platforms like Twitter, Facebook and LinkedIn are as fresh as they come in that regard. Twitter alone generates 8TB of data each day and on Facebook, 30 billion pieces of user-generated content are posted every month. These are staggering figures for an industry so dependent on customer data.
"In the lifetime of a person, there are seven or eight opportunities where a financial institution can sell," Massa says. "For example, if someone gets engaged, they'll be thinking of marriage and looking to get a different account. If they start a job for the first time, they might need a credit card. If that person goes to buy a house, they'll want a mortgage and insurance.
"These are the crucial moments of an individual's life that are not captured by the standard CRM systems used in the finance sector. There's so much information available on the internet, you just have to bring that information together. It really is a great waste."
Banks need to have marketing systems that are flexible enough to react to the information that comes out of social media, but there are good reasons holding them back. For a start, web-based technologies like Facebook and Twitter are still new forms of media that are difficult to integrate into legacy systems. The way social media works and the potential it has for a financial organisation remains largely unknown to the current stock of senior managers. And of those who do recognise its importance, many lack a working knowledge of how the data generated on media platforms can be exploited and analysed.
"It's definitely still a new topic on the agenda of executives," Massa says. "I think one of the main reasons for that is the lack of any real social media strategy. Too many financial organisations are talking about it, but too few are actually executing it."
Right to information
More fundamentally, for banks to use information lying in social networks, they need the permission of users. And that means creating a certain type of application that the clients of financial institutions will be happy to accept.
"People give rights about information to almost everybody, so why not to their financial organisation?" says Massa. "The relationship built between a financial organisation and a customer is long-standing and full of trust. I think giving them the rights to the information you share with others is only natural.
"There are, of course, a minority of people who would want to deny their bank the right to read basic information on their Facebook or Twitter page. But I don't think that minority will be a critical factor."
For a lot of people in the financial services industry, being able to view this data on the move is vital. CFOs want to monitor their company's performance and visualise simple business metrics anywhere and at any time of day.
"The era of the fax machine is over, people want their data to be mobile now," Massa says. "And not only are they after information on iPads and other devices, they also need to be able to do transactions on it.
"For example, people would like to sit on the beach in the Bahamas and sell 80% of the stock from company Y. At MicroStrategy, our mobile business intelligence can take responsibility for private bank portfolios in an innovative and convenient way.
"We also have incredible virtualisation tools that can create a dynamic visual report on a mobile very quickly. Speed and flexibility are both very important today because people just don't want to wait."
Social media might be a new area for MicroStrategy, but the company has been a leading vendor in business intelligence for over two decades. The business, which now has a presence in 23 countries, provides software products for a million different users in over 3,000 organisations, including many of the top global banks.
"We've been successful because we have the kind of industry knowledge appreciated in the marketplace," Massa says. "The four pillars on which our company is based - big data, transactional mobile, cloud computing and social media - have become crucial issues for the financial sector.
"One of the key points driving our success in all those areas is a belief in partnership. We have partners in various areas. On deals, sales and implementation we've worked with companies like PwC and KPMG. And we also have a load of strategic partnerships in place to build physical solutions for our clients."
Cloud computing is a key trend that the financial service industry is beginning to commit to. Concerns about data security, as well as the vast investments made on internal infrastructures, have until now prevented the sector from embracing cloud-based technology, but that appears to be changing.
"We believe cloud computing is part of the future," Massa says. "We know data can't leave the country in the financial services, but we still see a lot of interest from financial organisations in our cloud solutions. With social media in particular, we see how information can be stored safely and efficiently on the cloud. As a company, MicroStrategy has moved quite heavily in that direction over the past few years and we now have a major boost with our technology offering."
Basel III: an opportunity
Most financial institutions view regulations like Basel III as time-consuming and costly, but for Massa they present genuine opportunities. Investing in new business intelligence gives more to an organisation than the power to comply; it gives a range of up-to-date information that lets people learn far more about risk, price setting and a series of other business metrics.
"A lot of change is happening in companies today," Massa says. "And they don't just what to tick the box when they make investments. They want to do something useful and interesting with their money. With our sophisticated industry perspective, we can help them do precisely that."
Making the right choice on business intelligence software has become a real priority for the financial sector in recent years. What was once a matter for IT departments has morphed into a key business decision as organisations face an increasingly demanding economic climate. With its industry knowledge and tech-savvy software products, MicroStrategy has become a valuable partner for organisations looking to navigate these tough times.