Michael Shashoua: Channeling the Data Deluge

Last month’s European Financial Information Summit, hosted by sibling publications Inside Market Data and Inside Reference Data, drove home the ways that technology and communications advances are transforming and will continue to transform the financial services industry, especially in data management.

Keith Holdt of Richmond, UK-based strategic business insight consultancy TomorrowToday, says the explosion in the number of data-enabled mobile devices—such as smartphones, including Apple’s latest iPhone 5—are generating an exponentially increasing amount of data, all of it unstructured.

Here are a few of Holdt’s numbers: 1 million mobile phones are sold every day. And there were already 2 million pre-orders for the iPhone 5 at the time of the Summit, double the number of pre-orders for the earlier iPhone 4S.

And then there are the data numbers. The US alone currently consumes 3.6 zettabytes of data—this is data as a whole, not just related to the financial industry.  A zettabyte is 1 trillion gigabytes. Global mobile data traffic doubled for the fourth year in a row in 2011 and is expected to grow 18 times by 2016, reaching 130 exabytes. To get a sense of how big an exabyte is, imagine a stack of 33 billion DVDs, or 4.3 quadrillion MP3 files.

“This is a massive mine of insight and knowledge available to us,” Holdt says. “What do we do with this and how do we interpret it? What is the meaning of having this radical power of knowing everything?”

Swift’s change of the SSI format appears to be better suited to accommodate the high volumes of data in the industry’s future.

As Holdt sees it, dealing with this deluge of data will require a revolution in how information is processed, connected, analyzed and understood—not to mention the ways it will change trading, commerce, work and management.

Settlement Instructions Change
To drill down a little further into and get a little more technical about how innovations impact data, let’s look at one story recently covered in Inside Reference Data. Financial industry messaging provider Swift plans to move its standing settlement instruction (SSI) format away from a broadcast-only style (MT 074) to a dual format (MT 670/MT 671) that allows for sending and receiving SSI messages in a more interactive fashion.

A change in consumer technology is unexpectedly similar to this advance, and illustrates its meaning. That change is the effect the web is having on television programming as we once knew it. Streaming web video from YouTube, Hulu, Netflix, Amazon and others allows viewers to pick and choose their programming in a way that wasn’t possible when there were just broadcast networks; it’s similarly impossible with cable television providers.

And in Swift’s new SSI format, users can select categories within certain fields in the format, such as the type of transaction or national clearing code, thus defining and selecting what they’re getting. Also, reaching back to the beginnings of what made the internet possible—packet switching, the technology that allows digital messages to be sliced into parts, transmitted, and then reassembled at their destination—finds a similarity in the content of the MT 670 message itself. The message format contains codes indicating to whom and where SSIs are to be sent, what currency applies, and where that currency needs to be paid. Effectively, these are routing instructions for payments and settlements, in the same way packet switches govern message routing.

Paving the Way
Packet switching might not seem like much of an innovation, but it eventually paved the way for streaming video. And some might say streaming video is only a beginning. But the data explosion Holdt presents can indicate where all of this might go, and Swift’s change of the SSI format appears to be better suited to accommodate the high volumes of data in the industry’s future.