The use of Data Science in Finance

The hardest thing in the world to understand is Income Tax.

Albert Einstein

Thanks to the decades of change, opportunity and disasters, financial data in most forms is relevant, reliable and regulated. Today, we are inundated with data from around the world. But markets and institutions today and the set of regulations on the books is based on a long history of factors. And this process is dynamic. To understand where the institutional markets are today and when and why they might change requires a reasonable understanding of history. The Federal Reserve was established only in 1914 as a central bank, well over a century after the first central bank was established. Why? In US, the SEC and vast regulations of financial markets and accounting happened in the 1930s, a big switch from the free markets of earlier history. Why? The internet is essentially unregulated. What does this mean? What are the implications for the future? Understanding the present and planning for the future, requires an approach which collates data with logic and analysis.

Financial analytics is a discipline that helps to take multiple and granular views of a company’s financial data and use it to gain insight and take action. Although financial analytics has a wide reach and touches all parts of your company, it is especially useful in the context of profitability—a very important component of business success and performance management. Today’s business challenges demand timely financial information that enables executives, managers, and front-line employees to make better decisions, take action, and correct problems before they affect the company’s financial performance. Achieving better business performance requires more than just improving process efficiency or enhancing financial reporting. Rather, it requires improving effectiveness by leveraging advanced analytics that integrate data from across the organization and provide insight to the people who can impact business performance. To fully understand the factors driving the business requires timely financial information combined with data from across the company value chain. Frequently, the answers do not reside solely in the company’s financial reporting systems. To get the most complete picture requires integrating information from the company’s human resources, supply chain, customer relationship management, and financial management systems—and turning it into integrated and actionable insight.

BUSINESS APPLICATION

Financial Analysis

Analyze financial trends in key growth segments; Financial benchmarking against industry averages; Identify areas for internal improvement; Support corporate finance and treasury departments; Identify sources of funding Financial Trend Identification: Identify opportunities in growth segments; Analyze current trends and financial implications; Cost structure and working capital improvement; Financial ratio analysis

Merger and Acquisition Support

Business plan validation; Analysis of all top line assumptions; Proprietary investment ideas; Specific company identification; Due diligence support; Valuation and historical transaction analysis; Shareholders value creation; Post merger performance metrics; Financial Analyst Access and Briefings; Direct access to financial analysts monitoring the markets to foster interactive relationships; Continually updated research presented on a regular basis ensure the relevance and value; Maximise analyst contact and touch; Frequent public and private analyst briefings; Global analysts provide "on the ground" support

Trend Identification

Identification of growth areas; Sector themes and investment ideas; Identification of the best ways to play emerging trends; Investment strategy based on trend analysis

Specific Investment Ideas

Specific company identification; Proprietary investment ideas; Coverage of both public and private companies; Customised investment ideas for all stages of the investment cycle; venture start up to late-stage-buy-out; Equity analysis for institutional investors and hedge funds

Financial Framework for Analysis

Industry comparables and valuation; Financial ratio analysis; Portfolio company benchmarking; Portfolio company monitoring; Exit or realisation strategies

EXAMPLE FROM THE INDUSTRY

SAS FOR FINANCIAL SERVICES

Industry leading solutions to your challenges, today and tomorrow

The global financial crisis has challenged financial services firms in ways not seen for seven decades, but these challenges are not insurmountable. With more than 34 years of experience in financial services, SAS works closely with financial services firms – including banks, credit unions, lenders and capital markets firms – to provide solutions that address today's critical business needs. 

SAS solutions are used by more than 3,100 financial institutions worldwide, including 97 percent of banks in the FORTUNE Global 500.

http://www.sas.com/industry/financial-services/index.html

CAREER OPTIONS AND HOW ATI CAN HELP

THE FUTURE FOR FINANCE PROFESSIONALS

EMPLOYMENT CHANGE

As the level of investment increases, overall employment of financial analysts is expected to increase by 20 percent during the decade 2008 - 2018, which is must faster than the average for all occupations. As international investment increases, companies will need more analysts to cover the global range of investment options.

JOB PROSPECTS

Despite employment growth, keen competition is expected for these high-paying jobs. Growth in financial services will create new positions, but there are still far more people who would like to enter the occupation. For those aspiring to financial analyst jobs, a strong academic background, including courses such as finance, accounting, and economics, is essential. Certifications and analytical skill and knowledge of computers will enhance job prospects.

Who are companies looking for?

Most financial managers need a bachelor's degree, and it also helps to have a master's degree or professional certification.  Strong interpersonal, math and business skills are also essential.

Skills required

Basic analytical skills, strong numeric skills. Candidates for financial management positions need analytical skills especially VBA, MACROS and EXCEL.

Career plan for finance professionals

Career growth for Cost Accountants: Financial Controller; Senior Accountant; Financial Controller; Senior Financial Analyst; Senior Financial Analyst; Cost Accounting Manager; Accounting Manager; Staff Accountant; Accountant; Accounting Assistant; Accounts Payable Clerk; Financial Analyst; Office Manager; Accounting Intern

Career Growth for Tax Accountants : Senior Tax Accountant; Tax Manager; Senior Accountant; Tax Compliance Manager; Staff Accountant; Accountant Entry-level Staff Accountant; Tax Preparer; Accounting Intern; Administrative Assistant; Bookkeeper

Career growth in Accounting : Financial Controller; Accounting Supervisor; Accounting Manager; Entry-level Staff Accountant; Bookkeeper; Accounting Clerk; Administrative / Office Manager; Full Charge Bookkeeping; Office Manager; Administrative Assistant.

-64% of middle managers and above use Excel every day in the course of their work, over half of them have never been on an Excel training course. 

-Only 24% of users have been on an Excel training course in the past three years and of those who have attended, 23% cannot recall anything of value that was learned. 

-61% of proficient modellers had personal experience of an Excel error in a financial model causing a company serious consequences. (Findings from a survey conducted by Plum Solutions, a consulting and training company)

At ATI we aim to be able to enhance competence among people to:

Get a real-time view into a company and it's financial performance 

Help organizations close books faster by eliminating manual reporting processes

Develop Real-Time Financial Dashboards

Do Financial and Operational Reporting

Ad-Hoc Analysis

Securely access Business Insights from anywhere

Carry out effective Budgeting and Planning