Summary: BI in the financial services industry is beginning to migrate from the departmental level to enterprise-wide applications as more and more executives make the decision to integrate information on an enterprise-wide basis. This is primarily to stay in compliance with recent federal legislation but also to improve overall business operations.

Unique to the Financial Services industry is the historical focus of BI on money management as opposed to business operations. After all it is the money that defines this industry whether it's banking (savings and loans, commercial banks, mortgage banks, credit unions), securities and exchanges (brokerages, investment banks, investment advisors) or international finance (currency exchange, foreign investment).

Accordingly, BI's success in this industry has been primarily at the departmental or line of business level because it's their performance that drives the overall financial results for the business. In fact, a recent Gartner, Inc. survey showed that more than 90 percent of financial services companies agreed they received the value expected from their BI investment. Yet, despite this success, it has been Financial Services companies, as a whole, that struggle with enterprise-wide solutions and this is where we see the two biggest BI opportunities for this category:

1. Regulation: The regulatory environment for all companies has been dramatically affected by two major pieces of recent federal legislation: the USA Patriot Act and the Sarbanes-Oxley Act of 2002. These legislative acts place new burdens on all companies, and financial services companies need to use enterprise-wide BI for compliance.

   Section 326 of the USA Patriot Act requires companies to verify the identity of all company customers and as a result financial services organizations must be able to reconcile all customer information to create complete and accurate profiles of customers. In addition, they must be able to compare these profiles against lists of specially designated nationals and blocked people (known drug dealers, terrorists and other enemies of the state) distributed by the Office of Foreign Assets Control (OFAC) and report matches to the federal government.

   The Sarbanes-Oxley Act of 2002 was a direct response to the financial and accounting scandals that emerged in 2001 and 2002. The law requires public companies to implement procedures that ensure their audit committees can document underlying financial data to validate earnings reports and meet demands for accuracy in pro forma numbers. The Act raises the maximum penalty for securities fraud to 25 years and to 10 years for destroying key financial audit documents and e-mails. It also requires CEOs and CFOs to certify that financial statements fairly represent the financial conditions of the company.

2. Information Consolidation: Financial services may be about money and finance, but it is mostly an information business. Of course, tracking and managing money and assets are central to the business, but other than contracts and customer items such as plastic cards and checks (usually manufactured by a subcontractor), financial services companies produce statements and financial reports. This concentration on tracking and information has made company operational areas such as Sales & Marketing and Risk Management a natural focus for applying BI.

After all, the financial services business is largely about information, and most financial services companies have used or experimented with BI technology successfully. Such companies should look to employ their BI applications beyond individual lines of business to improve their enterprise-wide business operations and stay in compliance with federal legislation. As BI solutions become as important to the financial services industry as they are in retail and other industries, more executives will be making decisions to integrate information on an enterprise-wide basis and ensure that the right skills and experiences are in place to deliver high-value business results.

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