Data is the new oil as financial sector gets analytical about its decisions

12 Nov 2013

John Randles, CEO of Bloomberg PolarLake

For the giants of Wall Street and the banks and stockbrokers around the world that feed into the financial food chain, every morsel of data must be chewed upon before decisions are made.

In the wake of the 2008 bankruptcy of investment bank Lehman Brothers and mindful that the world really isn’t up to taking any more economic crap, real-time analytical decision-making and a resultant, credible paper trail are becoming the order of the day for firms.

At the heart of this transformation is a Dublin-based software company called PolarLake, which financial media and information powerhouse Bloomberg acquired last year for an undisclosed sum.

The newly constituted Bloomberg PolarLake has this past week been the lynchpin of a deal between Bloomberg and financial information provider Markit to distribute its pricing and reference data through each company’s respective enterprise data management (EDM) platforms to financial players around the world.

The upshot of this is that there will be more than one source of data that can be validated, analysed and acted upon in a fully audited environment.

The deal between Bloomberg and Markit is akin to two oil companies beginning to share their oil and distribution pipelines. In the financial world of 2013, accurate data is more valuable than oil.

The role of data

Data has a huge role to play, said John Randles, CEO of Bloomberg PolarLake.

Before the crisis of 2007/2008, all the investment in financial institutions was going into the money-making side of trading, now it’s going into risk management and compliance, he said.

“That’s why data is the new oil. In terms of data management, it’s pretty easy to take data from a single source, but where it gets more difficult and complex is when you need to use multiple sources of data in the midst of high-velocity trading to come up with crystal-clear decisions that can also be documented and included in audit processes,” said Randles.

Bloomberg PolarLake’s role involves trying to manage the complexity of this data world.

Traditionally, data management and analysis would have been the backwater of any financial institution, Randles said. Now the CEO, the COO and the CFO care deeply about data – it keeps them in business, they remain in regulatory compliance, and they can use knowledge to manage risk.

Randles added that traditionally banks and other financial institutions built their own systems to manage data or invested in commercial systems, resulting in a complex array of data feeds.

“What we are doing differently, and the reason we were acquired by Bloomberg, is to address this issue in a more holistic way and provide the data to financial institutions as a managed service,” Randles said.

The beginning of PolarLake

PolarLake began as a spin-out from Xiam, an Irish technology company Warren Buckley started in 1998. US telecoms equipment giant Qualcomm acquired Xiam for US$32m in 2008.  

PolarLake spun out of Xiam in 2003 to focus on an area known as XML pipelining that enabled the streaming of financial information.

With an eye on the future beyond its traditional terminal business, Bloomberg acquired PolarLake with a view to building the next generation of financial managed services.

At the time of the acquisition, PolarLake employed 45 people. That number has now grown to more than 100 Bloomberg PolarLake staff members in Ireland and more than 100 globally.  

Bloomberg owns 100pc of Bloomberg PolarLake, whose headquarters and management team are in Dublin. The key reason for this is access to the best talent in this area – data operators – so the people, the process and the technology is still in Dublin, Randles said.

The move towards managed services is strategic for Bloomberg, he added, which is endeavouring to differentiate itself from rivals who focus on business process outsourcing (BPO)-type services.

“This is a modern approach – we’ve built our own data centres that are separate from Bloomberg, where we can process data from 10 different data vendors,” Randles said. “These multiple sources of data result in a complex workflow that financial firms need to be on top of. They need to be able to show a financial regulator why the price for a security was chosen on any given data, what was the source of data that led to that decision.”

Auditors and regulators are asking those questions, Randles said, and everything is now about transparency around price and reporting. It is crucial to be able to offer that in a managed environment and back everything up with a 360-degree view of a decision, he added.

The financial world is just as keen as regulators and governments to achieve transparency; neatly dividing their views of the world today as pre-crisis and post-crisis, Randles said.

“There’s a new appreciation that bad things can happen. To avoid the mistakes of the past (firms) need to be ready for them or avoid people getting into a bad position,” he said. “People talk about focusing on risk management, but accuracy of data is king.”

A version of this article appeared in The Sunday Times on 10 November

Data and analytics will be the subject of Silicon Republic’s Irish Data Forum on 22 November. For more information and speaker updates, visit the Irish Data Forum website

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years