Data Analytics in Finance

Any Financial Modelling Podcast listener will know that data is a passion of mine. In the past few years, the finance world has woken up to the power of data – from hedge funds to traders. Citadel, the American hedge fund and financial services company, recently indicated its desire to have top data talent, but poaching from a rival firm.

"Citadel just poached Two Sigma's data chief for its tech team — and it's the latest sign of how aggressively the $30 billion firm is pursuing top talent from Wall Street and Silicon Valley"

Domain Expertise

Indeed, it is a rare breed of data analytics expert that understands both finance and the applicability of data analytics in the finance domain, whether that is investment banking or fund management. I have spoken before how the effective data scientist requires domain expertise, however many data scientists are not interested in structured finance, and vice versa (and I’m talking about corporate finance and investment banking, not quants who have been in trading and global markets, or retail banking, for at least a few decades).

"These teams at hedge funds have a variety of roles, but the positions that are top of mind for many firms involve data ingestion and analysis because the companies hope to gain an edge from the massive amounts of structured and unstructured data that now flow into managers' systems"

From Cleaning Data to Exponential Value

Make no mistake though, these data scientists will face the same challenges as data scientists in every other industry, from having to be a data ‘janitor’ to wrangling large amounts of structured and unstructured data from various places.

"Traditional managers have felt a growing pressure to use cutting-edge technology such as artificial intelligence and machine learning to digest the seemingly endless amount of data made available to Wall Street."

Ultimately, as data scientists become prevalent in every industry, those companies without data scientists will come under more pressure to perform and look for the edge. Data scientists will continue to add more value as they become domain experts – and this will lead to the next revolution in data analytics as it starts to deliver exponential value to business.

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