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Fear factor about big data leaves investors behind
February 19, 2016 News

While investors and financial institutions are challenged by increasingly unpredictable and volatile markets, they are also struggling to come to grips with the vast swathes of information now available to help mitigate the risks.

Big data is a common tool now being used by retailers and logistics companies, but large investment houses have only started scratching the surface on how to apply things like satellite imagery, according to experts.

“We have no idea where the peak of this curve is. We haven’t really started playing with the data from the internet of things. No more than 5 to 10 per cent of fund managers are well up on that curve and well on their way to being extremely competitive users big data analytics,” says Robert Maxwell, the chief of big data consultancy finINTEL Solutions.

Mr Maxwell told the Citi Asia Pacific Investor Conference in Hong Kong there was still a “fear factor” around big data and a reticence to get involved despite the low hanging fruit, particularly for financial market analysts. He said on the investment side of the industry, about 80 per cent were still early in the adoption of big data.

AJ DeRosa, who heads global sales for satellite imagery data firm Orbital Insight, said the gap between firms embracing big data and those who stuck with traditional research was still small but widening.

“The gap is not there yet but it is starting and it is going to be a chasm at some point. There are funds out there and they know how to use this stuff. They are 10 years ahead of everyone else. It is going to be very hard for stock pickers who are not using big data to compete in the future,” he said.

“It is not going to be the be all and end all but it is going to be an important part of the investment process.”

He said investment houses like Fidelity had started setting up data science and data analytics divisions, but there were in a minority.

Big data, which is information derived from things like satellite imagery, transactions, social media, and machine learning to pick trends or pattern behaviour, is being widely used in industries such as retail and healthcare. It is expected to change the role of analysts radically in years ahead.

Cybersecurity was also another theme at the Citi conference.

Apple this week rejected a court order to help US investigators unlock an iPhone used by one of the shooters in a terrorist attack in California, sparking a confrontation between the tech industry and the government over encrypted data.

“We live in a digital world and unfortunately our laws have been in the analogue world,” Citi’s chief information security officer and former FBI agent, Tom Harrington, told the conference.

“This is one of our first challenges to have a dialogue to push it forward. The government has a good case here. We are going to see a bit of a conflict in the next year or more between technologists and the political systems that are out there,” he said.

Michael Smith travelled to Hong Kong with Citi


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