The art of investing is based on data analytics and `human judgment`. More than half of what we include within the latter human part, can actually be derived from better data analytics. Products and services from Big Data provider companies, are selling improved solutions and decision making tools that reduce human judgement and error. I believe that more than half of the events that we label as black swans (posteriori) are wrongly categorised as such. Our inability to identify the second or higher order correlations and visualise second and higher order effects, results in this. Was the subprime crisis, really a black swan event, like a nuclear plant explosion or a tsunami? Or was it simply the result of hidden complex correlations?
The Big Data movement is broad and Tech companies or Fintechs are focusing on offering niche products and services in the space. Some are focused on predictive analytics using big data, other on making better decisions. Some use structured data, others semi’stuctured or unstructured data. Healthcare, Media and advertising, communications and technology, and financial services are some of the main industries that are looking to unlock value not only to process larger amounts of data simply faster.
Prophis technologies is a Level39 Fintech that uses advanced graphic technologies to help financial institutions manage their risks better. In non technical terms, Prophis needs to link to enterprise wide structured data. This data while available, most of the time remains segregated in the separate business division and geographic locations. Prophis offers a relatively painless process of capturing all this data and creating a new kind of database, a graphic database. The beauty of this pooling process, is that it can be easily expanded and updated going forward without any IT intervention. The data is now stored in a different way than traditionally and that is exactly what allows Prophis to exact rat value from it. The next step is when Prophis waves its magic wand for the second time, and processes the data within this graph database and creates a wonderful Dependency graph. The magic then can be linked to the front end of internal systems for use in all departments and geographies. The UX is simple and powerful with an active dashboard that showcases the unlocked stories.
Data hides value, Dependency graphs tell valuable hidden stories.
CIOs can manage risks with more confidence and less blind spots.
Wish you had the Prophis tool the day the VW black swan event happened, to uncover instantly the correlations with countries and the industries that are invalided in the value chain of such an organisation? Visualizing counterpart risks, uncovering 2nd and 3rd order country risks, for example. Or visualizing effects on fixed income related corporate spreads, on CDS levels Instantly measuring the imminent downgrades and emerging trends in the adjacent markets. Visualizations without tables of scenarios, bars and pies. Prophis technology allows you to focus on relationships that are not even in your peripheral vision and ability to watch them change position (increase or reduce their correlation). Risk management and decision making in investments, becomes more clear and reduces the occurrence of Blind spots or look-alike black swans.
Prophis is using NEO4J database technology, which is an enterprise graph database provider. These technologies have been used in fraud detection in the public sector and in other industries. A few financial institutions have actually been using developing graphic databases in specific areas like proprietary trading, but long before the emergence of APIs and therefore, they lack the agility that the Prophis product line offers.
Prophis is targeting financial institutions and central banks. Earlier this year they became the first European Satrap to link up with Fintech Sandbox, the Boston-based non-profit that promotes financial technology innovation globally by providing free access to critical data and resources to FinTech entrepreneurs and startups. Sandbox data partners include Thomson Reuters, FactSet, Benzinga, Tradier, SIX Financial Information, Xignite, Yodlee, S&P Cap IQ, OpenFin, and Quovo. Infrastructure partners include Amazon Web Services.
Charles Pardue, the CEO and Dorothy Fuhrmann, COO, are both seasoned financial professionals with considerable entrepreneurial expertise. I met them at the InvestTech Fintech Forum in London in September. They are bringing to market an otherwise proprietary way of managing risk by extracting value from structured financial data.