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Cornell Task: 2016' Jieting Chen

Jieting Chen
Professor Andrew Chin
Wall Street Trek
2017-05-08
 
Leveraging Big Data in Banking Sector----Reflection on Wall Street Trek
 
For me, the most impressive lecture in Wall Street Trek is Leveraging Big Data in Asset Management by Andrew Chin. He talked about the on-going use of big data in asset management, and the future trend. Also, he talked about the opportunities and challenges in leveraging big data to 1) impact investment decisions, 2) improve sales productivity, 3) enhance client interactions, 4) create operational efficiencies. Asset managers will need to develop strategies to use this data. Also, there is likely a continued demand for professionals with data science skills.

As I am working as a risk management consultant for banks, I think what Andrew’s points of view can also be leveraged in the banking industry. Big data is leading a revolutionary change in Chinese banks.

(1) Data will become the core competitiveness of the bank

Now more customers use e-banking and mobile terminals, banks have recorded a very rich location, behaviour preferences, demand preferences and other information, a large number of information waiting for data analysis and mining. For banks, people, counters, technology in the next period of time are substitutable, only the data is a long-term accumulation, and an irreplaceable key factor. If a bank cannot leverage data as a strategic asset to be developed, the bank will be in a backward position in the fierce market competition in the future, or even lose its core competitiveness.

(2) Typical data application in the banking sectorn

A. Customer

Through the comprehensive collection and integration of internal and external customer data, a complete customer analysis dashboard can be formed to forecast customer needs, and integrate the whole line of products and service resources, so as to provide comprehensive services to our customers.

B. Risk management

The use of customer transactions, industry trends, regional environment, business owners information and other information help banks to find the potential risks more timely and accurately.

(3) Risk management data analysis status quo of Chinese banks

Chinese banks are aware of the importance of data analysis in risk management, especially in the retail and credit card, etc. The banks have carried out many useful attempts, and already made some achievement.

In the field of risk management, most banks have carried out a series of big data application such as scorecard and risk measurement, but there is still room to be improved for risk forecasting and early warning. Traditional risk measurement relies more on financial data of lenders, and these data is often lagging behind. Especially for small and micro enterprise lenders, there is big problem of using financial data for risk control. Big data is useful in this regard. And the value of big data in risk management can be further excavated.

(4) Examples of big data application in risk management

Small Business Risk Management

Due to the poor quality of financial data of small enterprises, the risk management of small enterprise credit business is more dependent on the behaviour data of small business owners. By analysing the behaviour of small business owners through big data analysis, it helps to evaluate the probability of default so as to improve the risk management of small business.

Anti-fraud in Loan Application

Linking customers, accounts, behaviours etc. through social network analysis (SNA), such as sharing phone numbers, transferring money, etc., identifying potential affiliates and illegal intermediaries to prevent repeated lending and organized fraud.

Overall, big data is playing an increasingly important role in banking sector, and just like Andrew said, we should always pay attention to the challenge of using big data.
 
Visit to Museum of American Finance
 
The Museum of American Finance, an affiliate of the Smithsonian Institution, is the nation's only independent public museum dedicated to celebrating the spirit of entrepreneurship and the democratic free market tradition which have made New York City the financial capital of the world. The museum itself is part of the history of the nation’s finance with the relocation to the very old site of Bank of American. Housed in an historic bank building on Wall Street, the Museum’s magnificent grand banking hall provides an ideal setting for permanent exhibits on the financial markets, money, banking, entrepreneurship and Alexander Hamilton.

The Museum's core mission is to preserve, exhibit and teach about American finance and financial history, thereby connecting the past with the present while serving as a guide for the future. And it is hoped that people can be inspired, and to apply the knowledge applied to their personal financial decision-making.

Since the September 11, 2001 terrorist attacks and destroyed the New York World Trade Centre, for security reasons the New York Stock Exchange (NYSE) tour was no longer available. Since the Museum is near to the NYSE, visitors interested in the Exchange can visit the museum instead, and get to know the history of the NYSE.

I was impressed by the history of NYSE. After the evolution for all these years, it has set up a refined trading system and a set of well-rounded trading practices. It has laid a solid foundation, and now many world-class trading market also follow a similar practice.

For example, floor brokers, representing investors’ order to buy or sell shares, and work to get their customers the best price. Brokers’ booths are home base for a firm’s floor brokers. Brokers can interact with market both in person and electronically on the trading floor, using advanced tools to assist them in handling trades. This practice is very common in the stock exchange in many countries. Following the development of technology, now NYSE is using E-broker which is a wireless, handheld device that enables floor broker to submit and manage quotes and orders, track executions and speed the flow of information between customers and the point of sale.
 
Understanding the development history of the NYSE is important to understand the history of global stock exchanges. It gives us some ideas about the future development and trends of the stock exchanges.