More on How Technology Could Have Averted Financial Crisis


I've written in the past about how technology, particularly better data integration, might have helped avoid the financial crisis. So, a post last week by Joe McKendrick on a similar vein naturally caught my attention.


McKendrick, writing for Informatica's Perspectives blog, focused on whether better business intelligence could have averted the crisis. Since better BI requires better integration, as far as I'm concerned, McKendrick's column is part of our ongoing discussion on this.


McKendrick was prompted to write his piece by two recent items. The first was a recent global survey, conducted over the summer by the Economist Intelligence Unit on behalf of SAS, on the role of risk management programs in the recent credit crisis. That survey found that over 70 percent of financial services executives queried "believed that the losses stemming from the credit crisis were largely due to failures to address risk management issues."


The second item was a Computerworld article examining how poor data practices contributed to the mortgage crisis, and how complex event processing and better business intelligence could have helped. We previously had covered a similar issue -- the role of data integration in the mortgage crisis - in this IT Business Edge Q&A.


McKendrick offers this noteworthy observation:

"Complex event processing tied to pervasive BI systems would have made the ability to deliver such alerts more automatic. I heard it pointed out that a typical bank may have 10 million events going on each day, so being able to identify those few business-critical events is something the business needs to carefully weigh. Putting analytics, CEP, and data integration into a common middleware layer that would enable both businesses and regulators to access and share this critical data would have provided greater transparency."

Obviously, technology can't do it alone. As IT Business Edge reader Paul Glen pointed out, technology can't force dishonest people to behave:

"It seems that participants in this were willfully ignorant, not uninformed. You can present people with fantastic tools, accurate data and useful information, but if they are determined to ignore it, there's not much we can do."

On the other hand, maybe technology can provide the tools honest people need to identify potential problems and uncover the risky practices dishonest people love to exploit. I definitely think it's worth exploring.