Can Banks Utilize Data Analysis to Play 'Moneyball'?

It's likely there has been plenty of conflict and fear in the room as financial institutions have tried to come to grips with the implications of big data, but big data will break down organizationl boundaries and force people out of their comfort zones.

I recently saw "Moneyball," the film adaptation of Michael Lewis's book about Oakland A's GM Billy Beane and his determination to use data analysis as a competitive weapon in Major League Baseball. Not only was it a terrific movie, it was an entertaining reminder of how difficult it can be for tradition-bound organizations to effectively leverage their vast information resources.

It's not so much about adopting the technology (the movie Beane, played by Brad Pitt, hired a quant, played by Jonah Hill, to crunch the numbers) as it is about persuading people in the organization to think differently about their business. Beane/Pitt made no effort to hide his frustration with the tradition-bound baseball scouts who scoffed at his efforts to use data-based metrics for assembling a team that could win. And as he became increasingly convinced that a data-driven personnel strategy was the only way the A's could survive, Beane/Pitt also became increasingly ruthless with those who resisted him.

A meeting among IT managers, line-of-business executives and data management experts in a bank conference room may not be as dramatic (or sweaty) as a face-off in a baseball team's locker room, but it's likely there has been plenty of conflict and fear in the room as financial institutions have tried to come to grips with the implications of big data. In addition to promising better and more profitable insight into customers, channels and risks, big data also is going to change the ways banks operate by breaking down organizational boundaries and forcing people out of their proverbial comfort zones. As McKinsey & Co. partner Allen L. Weinberg notes in a discussion of the competitive implications of big data featured in this special digital issue (page 10), "It has to be the data scientists sitting with the business folks. ... It's getting these people talking together and sharing across the data."

One reason why it's so important to knock over the cultural obstacles that can detour efforts to seize big data's promise is that the competition probably is on a parallel path. The irony of "Moneyball" is that while Billy Beane confronted skeptics in his own organization, executives of other teams (most notably the deep-pocketed Red Sox) embraced his vision and tactics. The A's appear to have had a very small window of opportunity to capitalize on the team's data advantage -- with only 29 competitors in the major leagues. In the banking industry, the odds are even tougher. But the potential rewards are worth at least as much as a World Series ring.

Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio