| Analytics of 'big data' in the financial industry were the highlight of the second annual FinTech Innovation Lab program, run by the New York City Investment Fund and Accenture. Six startups, as winners of the program, demonstrated their solutions to dozens of Wall Street professionals in Manhattan on July 18.
Their presentations provided a glimpse into the financial industry's technology innovation and investment priorities, reflecting the industry's growing emphasis on 'big data' solutions—managing and deriving value from the terabytes and petabytes of raw, unstructured data that proliferates on social and mobile networks and the vast IT infrastructures of financial institutions.
FinTech Innovation Lab is one of several programs the New York City Investment Fund has launched to support entrepreneurs in industries that traditionally haven't gotten much attention from the venture capital community. During the program, the executives of startups were mentored by representatives from the world's leading banks and venture firms.
The 2012 FinTech Innovation Lab class included BillGuard, Centrifuge Systems, Digital Reasoning, EidoSearch, True Office and Visible Market. The firms were evaluated and advised by chief technology officers from the world's leading financial services firms, including American Express, JPMorgan Chase and so on. All startups accepted into the 12-week program have an option to receive $25,000, which will convert into shares in the company's next round of equity financing.
"The result of the program has been the creation of in-demand commercial products that will have significant impact in the marketplace. This year's class is on the pathway to becoming the next generation of successful financial technology entrepreneurs in NYC," said Maria Gotsch, president & CEO of the New York City Investment Fund.
"The bank mentorship is a dream come true for FinTech startups," said David Kedmey, president of EidoSearch, one of the six winning firms. "I cannot overstate the value of our discussions with members of the entrepreneurs network. They took an active role from the outset of the program to help us build a strong foundation for growth. Their deep knowledge of the financial industry enabled us to clearly define our two main customer segments."
EidoSearch is a powerful search and discovery tool for financial professionals. It allows financial professionals to generate new trade ideas and discover relationships spontaneously, by using the data itself as the search query.
"Our cloud-based service allows financial analysts to do deep queries of numerical data with a few clicks, avoiding the traditional programming requirements," said Steven Zhang, co-founder and CEO of EidoSearch, "When volatility spikes, for example, our platform helps users to find similar historic volatility and understand how the market responded."
Zhang, the only Chinese in the six winning firms, is a renowned expert in signal and information processing technologies. He conceived the idea while attending the University of Chicago's Booth School of Business with Kedmey, a former investment banker, while Zhang was on sabbatical from Ryerson University based in Toronto. The project drew from the pairs' disparate experiences in finance and computing.
"Information industry is facing a challenge now," the graduate from China's prestigious Tsinghua University told Beijing Review. "It is easy for everybody to get access to 'big data,' but it is hard how to analyze and process it. In some way, innovation of financial technology lies in how to simplify sophisticated numerical queries, which will be a turning point."
According to Celent, a financial research firm, technology innovation will play an increasingly vital role in the financial services industry. The U.S. retail and corporate banking sector alone is expected to increase spending on new IT investments and innovations by one-third through 2013 -- from $10.6 billion in 2011 to $14.1 billion in 2013, while the market for big data technology and services is expected to grow from $3.2 billion in 2010 to $16.9 billion in 2015. The amount of digital information created globally in 2005 was less than two-tenths of a zettabyte; in 2020 the world is expected to produce more than 34 zettabytes of digital information, according to International Data Corporation (IDC).
"The world's leading financial institutions understand that mastering 'big data' is critical to their success," said Bob Gach, global managing director of Capital Markets at Accenture, a global management consulting, technology services and outsourcing company. "Information is the lifeblood of financial services. As we enter a new age of big data and the proliferation of social and mobile networks, banks will need to leverage emerging analytical technologies and learn from the critical lessons of other industries, such as intelligence and defense. Big data and analytics will play a central role in helping institutions reduce risk, identify growth opportunities and rebuild profits. We're proud to be part of this knowledge-transfer occurring at the [FinTech Innovation] Lab."
The financial meltdown since 2008 has taken the perception of working on Wall Street from positive to negative. Although New York and New Jersey form the largest center of technology jobs, companies there are hiring only a fourth as fast as those in other technology destinations such as Dallas and Los Angeles.
As a nonprofit that is supported by million-dollar gifts from wealthy New Yorkers, many of whom made their fortunes in finance, New York City Investment Fund is looking for ways to create jobs in the city, which is positioned as the global financial leader, and "will continue to expand its role as the center for financial technology innovation into the future," said Gotsch.
(Reporting From New York City) | 
