European Banking Authority Publishes Report on Big Data and Advanced Analytics01/13/2020The European Banking Authority has published a report on big data and advanced analytics in the banking sector. The report sets out the findings of the EBA's review of big data and analytics and presents key pillars and elements of trust for the development, implementation and adoption of BD&AA by banks.
The EBA reports that BD&AA are leading to changes in firms' business models and processes and are part of most firms' digital transformation programs. However, banks are only using core banking data for data analytics instead of other external data sources, mostly due to reliability and accuracy concerns. Furthermore, firms are at an early stage of using machine learning with a focus on predictive analytics based on simple models; more complex models are perceived as involving explainability and interpretability issues. According to the EBA, banks recognize the need to develop relevant knowledge, skills and expertise as well as to address accountability, ethical and data quality issues.
The EBA presents four key pillars for the development, implementation and adoption of BD&AA by banks. These are data management, organization and governance, technological infrastructure and analytics methodology. The EBA considers that ongoing work is needed to build trust elements into the development of BD&AA. The trust elements referred to by the EBA are ethics, explainability and interpretability, fairness and avoidance of bias, traceability and auditability, data protection, data quality, security and consumer protection.
The EBA intends to continue to monitor the progress of BD&AA in financial services and will issue opinions for guidelines, as appropriate.
View the EBA's big data and advanced analytics report.
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