Banks Turn To Data Science For Answers Amid Pandemic

The uncertainty surrounding COVID-19 has made data, analytics, and machine learning more valuable than ever.

With a nod to the growing importance of data and analytics (D&A), Citigroup recently announced a new investment banking team that combines three existing groups–financial strategy, data science, and shareholder activism–under one umbrella.

The idea behind the Strategic Advisory Solutions (SAS) unit is to “empower” Citi’s investment bankers through access to data in a consistent and scalable format, according to Muir Paterson, who heads the new 80-banker team.

Citi’s investment banking finance specialists typically work with only a handful of clients at a time, often face to face, but during the Covid-19 crisis with bankers working remotely the unit has been overwhelmed by the “sheer volume of requests for advice” from clients, Paterson tells Global Finance. “It’s been exponential.”

Many questions are liquidity-related, Ajay Khorana, head of the Financial Strategy Group, a part of SAS, adds. For example, should a company slash its stock dividend?

“The dividend question is a frequently asked question today, because liquidity in the balance sheet is a very important consideration” given the unsettled economic conditions in the world, says Khorana. Requests are coming from all regions­­­­­—the US,­ UK and Asia.

This is where data science can help. SAS has been using machine learning to run pandemic scenarios:

  • What if there is a second wave of Covid-19 in Europe?
  • What are the projected economic and social consequences and how might they impact a client’s liquidity needs?
  • What if a new epicenter develops in Africa? 

Elsewhere, BNY Mellon Asset Servicing, in collaboration with Microsoft, recently announced the launch of three new data and analytics solutions that use analytics to reinvent distribution models for investment clients.  Distribution analytics and ESG solutions are particularly in demand in the current environment, Charles Teschner, Global Head of Data and Analytics Solutions for BNY Mellon, told Global Finance.

“Our vision is to take data from being a by-product of our traditional business, to thinking about it as the ‘new oil’ and an asset class in its own right,” says Teschner.