Developers need to build systems for crossing lots of data sets from legacy data warehouses as well as Hadoop clusters and make available options for visualizing trends that might otherwise be obvious, Francisco said. That’s when business experts come into play and ask questions and derive insights that could lead to new strategies and campaigns.

How does that work in practice? Facing greater volumes of data, the NYSE has trained business analysts as “data architects” to develop a system with IBM products for capacity planning and spotting patterns to detect fraud in billions of transactions each day, Werr said. Analysts also need to be able to figure out if a a possible fraud case is a false positive. Those are early-stage use cases for analyzing data in near-real time.

For now, financial deployments tend to play out on premise. Werr pointed out places where public clouds make sense. Developers can test out new data architectures for data sets. But the cost advantage of running on production scale on Infrastructure as a Service (IaaS) such as Amazon Web Services is appealing, Werr said. But, at least for now, bandwidth across multiple data centers is an issue, he said.

Check out the rest of our Structure:Data 2013 live coverage here, and a video embed of the session follows below.

A transcription of the video follows on the next page

Go to page 2 (of 2) on GigaOM .

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How HR can make the case for workforce analytics
• The 2013 task management tools market
• Social 2013: The enterprise strikes back

That may sound like a small change, but it’s pretty fundamental to Transferwise’s future. Here’s why.

The previous system involved three steps (or, from the customer’s perspective, two). An example: a British customer would go to Transferwise’s website and say that he wanted to send £100 ($151), for example, from the UK to Germany. He would then need to visit his own UK bank’s online banking facility to transfer the £100 to Transferwise’s UK account. The startup would then take the euro equivalent out of its German funds – stocked up by users in that country – and make a local payment in Germany to the intended recipient.

The introduction of debit card payments removes that second step, meaning the customer can now do everything needed in one go on Transferwise’s website. This removes a major source of friction, and I would be surprised if it didn’t accelerate the company’s growth quite quickly (Transferwise did £10 million in currency traffic in its first year, up until the end of February 2012, and by the end of 2012 it had done £50 million).

“We made it simpler and faster for our customers,” CEO Taavet Hinrikus, who was once Skype’s first employee, told me.

According to Hinrikus, Transferwise’s customer base largely consists of individuals and small businesses, and the average transfer amount is around £1,300. The company offers savings of up to 85 percent on standard international transfer rates, levying a £1 charge on transfers up to £200 and typically just 0.5 percent on larger transfers. Exchange rates are taken straight from the interbank market without any fiddling of the going rate (as happens with some banks and wire transfer companies).

There are limits to what Transferwise can do, though, and regulation is unsurprisingly (and understandably) the limiting factor. Within Europe, if you’re a financial services company and you’re given the all-clear by one national financial regulator (the UK’s Financial Services Authority or FSA, in Transferwise’s case) then you’re fine to operate anywhere on the continent. However, the company does not have regulatory clearance in other parts of the world, such as the U.S.

For that reason, although Transferwise can handle transfers from Europe to the U.S., paying out in U.S. dollars, it can’t handle the reverse transaction. The same will apply to Canadian dollars, which the platform will start supporting in a week or so. You may be wondering how that works if Transferwise can’t actually have customers in the U.S. or Canada — according to Hinrikus, the company uses “large corporate peers” on that side of the Atlantic, including large companies sending money to Europe, other trading platforms and “financial markets”.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Startup growth and the new recruiting ecosystem
• CES 2012: a recap and analysis
• Beyond social: the crowd-based enterprise

The majority of LinkedIn users are in the United States (74 million of the 250 million), although the next-highest number of users comes from India, with 18 million users, and Brazil and the United Kingdom, each with 11 million. The company noted that membership is growing fastest in Turkey, and mobile growth is greatest in China and Brazil, speaking to the company’s ability to tap into emerging markets. The biggest sectors that users come from include information technology, financial services, and higher education.

However, 200 million registered members — not regular active users — is still a far cry from Facebook’s 1 billion monthly active users as of October, and even in December, Twitter announced via a tweet that it had more than 200 million monthly active users.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The quantified self: hacking the body for better health
• Social media in Q1: commerce and discovery dominated
• Controversy, courtrooms and the cloud in Q1

Finland’s Holvi is trying to change that. The company’s services are aimed at teams that want to quickly set up a new project (Holvi is powering ticket sales for the Slush conference in Helsinki, for example). Users can set up shared accounts and start receiving payments within minutes, and team members can collaboratively manage budgets. You can even set up an account for each of the team’s activities, and accounts can effectively act as storefronts for selling goods online.

And, in that Finnish spirit of openness, you can choose to show your account details to the world at large. In recent municipal elections, some politicians did just that with their campaign funding accounts, in a bid to demonstrate transparency.

It’s a pretty bold idea, and the company has just pulled in a new round of investment. The amount isn’t being disclosed, but one of the investors is Podio’s Thomas Madsen-Mygdal, who is now also on the Holvi board.

“I’ve been tracking the team for a long time, and in the end I couldn’t help myself,” Madsen-Mygdal told me. “I think the need for something to happen in this space is so big right now. An online bank is still the same as it was 20 years ago with telephone banking, and Holvi is fundamentally trying to change what it is.”

The investment is intended to drive Holvi’s internationalization. The firm is already up and running in Finland – getting there meant dealing with the country’s financial services regulator, of course, but it also gave Holvi the authorization it needs to go live across the European Union.

According to Madsen-Mygdal, that’s going to happen around the middle of next year. It’s a simpler task than it may at first appear, as Holvi is in reality a layer on top of more traditional accounts – all the company really needs to do is find banks to partner up with in each new territory.

And beyond Europe? Madsen-Mygdal says that’s “the vision”, but Holvi’s taking things one step at a time. After all, outside the EU, the company will need to engage with the financial services regulators of each new country it enters.

The regulators’ first question, obviously, is around the potential of using Holvi for money-laundering. However, the company says it avoids that – it may be pretty frictionless setting up a Holvi account and receiving funds, but users have to go through the same authorization procedures that would accompany the establishment of a normal online banking account if they want to pay out funds.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Google and the Ghost of Silicon Valley Past
• Will cloud computing push the BRIC market to the front?
• Facebook’s tactical retreat on privacy

For its part, FinQloud is about what it sounds like. According to a Nasdaq press release announcing the service:

“The platform combines AWS’s secure, flexible, and cost-effective cloud infrastructure with NASDAQ OMX’s experience in providing technology and advisory services to exchanges, regulators and broker-dealers that operate within a complex global regulatory framework. FinQloud may be used by a variety of financial services firms managing data not only from NASDAQ OMX but also from any number of sources.”

In order to meet stringent regulatory compliance requirements, all data connections to FinQloud will pass through an encryption system housed in a Nasdaq data center before making their way to AWS’s infrastructure, and use of R3 will be contingent on clients showing appropriate documentation to regulators.

FinQloud won’t be the financial services industry’s foray into public cloud computing, though. In 2011, the New York Stock Exchange rolled out a cloud platform called the Capital Markets Community Platform that focuses on speeding access to trading data from markets around the world. For years, Wall Street firms have been taking advantage of cloud computing’s easy access to on-demand servers to run compute-intensive risk analyses.

However, perhaps a bigger deal for AWS than FinQloud itself is what it says about how AWS — and other cloud providers — might go about getting into the business of targeting individual industries, especially heavily regulated ones. Close partnerships like AWS appears to have with Nasdaq, which technically is the one selling FinQloud, could help cloud providers establish toeholds in lucrative markets such as financial services without requiring them to stray too far from their general-purpose nature. Cloud providers supply the infrastructure, a market player provides the industry expertise, compliance features and a trusted face, and, in theory, everybody wins.

Feature image courtesy of Shutterstock user emin kullyev.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The fourth quarter of 2012 in cloud
• How direct-access solutions can speed up cloud adoption
• The role of converged infrastructure in the data center

The setup is similar to that in New York, with the consultancy giant and the banks joining forces with local public bodies – in this case the Technology Strategy Board, the Mayor’s Office and the City of London Corporation – to accelerate financial services startups. Applications will be accepted until the start of November, and six startups will win a place on the 12-week program.

Applicants will already have to have a working beta, and will have to demonstrate that they will really benefit from the access to senior banking executives that comes with the course.

“London is the world’s number one financial centre and a global leader in technology innovation, which is why the FinTech quest for entrepreneurs is such an exciting proposition,” mayor Boris Johnson opined.

If the original iteration is anything to go by, the London FinTech lab should come up with some interesting services. Recent grads from the New York operation range from ‘gamified compliance’ mobile apps (TrueOffice) to big data search tools (EidoSearch) and analytics engines for combating fraud (Centrifuge. Not the sexiest material, but all useful to the big names lined up behind the scheme.

And what a roster that is, with many names – Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan Chase, Morgan Stanley and UBS – being familiar from the New York version.

“In the UK, the intersection between the technology space and financial services space perhaps didn’t have the sort of accelerator that we’re looking to set up,” program manager Karl Meekings told me. “There’s obviously a whole array of accelerator programs that exist, but nothing focused on the financial services sector in this way. So we thought this was a good way to identify technologies which are relevant to financial services and which could improve upon the efficiency of the industry as a whole.”

From the organizers’ perspective, setting up the London lab makes sense: while anyone is free to apply to these programs, they need to relocate if they’re accepted, so it’s a natural move to have at least one European base. Meekings also noted that initiatives such as Tech City showed there was “something we could already tap into” in the London scene.

Could we see another of these labs elsewhere in Europe? Doubtful: if Accenture and pals are looking for that magic confluence of tech innovation and high finance, there aren’t too many places outside New York and London to look. If anywhere’s next on the list, my guess would be Singapore.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Google and the Ghost of Silicon Valley Past
• The state of cross-platform media measurement
• Will cloud computing push the BRIC market to the front?

On Thursday, the New York Times reported on the company’s pivot in business model; I followed up with a post about whether it will be able to keep its claim of moral superiority now that it’s essentially selling its methods to third parties that might not have been inspired by the same noble vision to get into the lending business. What neither post detailed was how ZestFinance’s new business might actually work to help reduce the approximately $8 billion extra (Merrill’s number, which seems to take into account total revenue rather than just rollover fees) Americans paid to payday lenders last year.

ZestFinance is no altruist– it’s a business designed to turn a profit, after all — but Merrill appears to believe steadfastly it’s on the right side of the ethical line. If it can take even 10 percent off the cost of payday loans, he said, that’s an annual savings of up to $800 million for borrowers, which is hardly chump change. “We’re not shooting for infield singles,” Merrill said, “we’re shooting for homeruns.”

Big banks are the key

Outsourcing its lending model to online companies such as Spotloan is one way to spread its data-driven underwriting model, but ZestFinance’s real democratizing effect might come from its pending partnerships with large banks and credit card companies. “The market won’t really be transformed until the big providers come back into it,” Merrill said, and ZestFinance provides a means for them to do that.

What’s interesting, Merrill explained, is that payday lenders require borrowers to have a checking account, which means they’re already tied into the larger banking system. Traditional banks have payday borrowers as potential loan customers, but banks often deal in larger loans (versus the $1,000 cap from Spotloan), and their reliance on traditional credit scores to assess risk means they generally won’t borrow to individuals with poor credit. What banks need is a way — like ZestFinance — to assess good credit risks who just happen to have bad credit, so they can create new products to serve them.

“[If I'm a bank],” Merrill explained, “I don’t have to find those customers, I just have to serve them better.”

For credit card companies, which already have products aimed at individuals with lower credit scores, Merrill said the challenge is finding a way to increase their approval rates without taking on undue risk. There, he said, he expects a situation like what happened when ZestFinance co-founder Shawn Budde was at Capital One and the company came into the subprime credit-card market with lower APRs, forcing the rest of the industry to follow suit. Credit cards might never be the cheapest means of credit, Merrill acknowledged, but done right they can be a lot cheaper than payday loans.

And actually, he said, payday lenders have approached ZestFinance about partnerships, too, “but those are the types of discussions we’re more careful with.” Most aren’t evil, he said, they really do want to provide a service, but their inability to assess risk beyond just looking at someone’s paycheck and work history has resulted in necessarily higher rates. If payday lenders want to stay relevant, though — especially as more banks get into the business of servicing small loans — Merrill thinks they’ll have to come around to ZestFinance’s way of thinking.

Douglas Merrill image by Pinar Ozger; banker image courtesy of Shutterstock user Goodluz.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Putting Big Data to Work: Opportunities for Enterprises
• The importance of putting the U and I in visualization
• A near-term outlook for big data

Merrill and former Capital One executive Shawn Budde launched ZestCash in 2006 2010  (it was founded in 2008) with the idea of using troves of personal data from the web and elsewhere to provide short-term loans to individuals underserved by traditional lenders. You can say what you want about ZestCash’s actual practices — it has been called out in the past for being little more than an online payday loan business, equally as predatory as its brick-and-mortar counterparts — but what made ZestCash a darling of the tech community was its use of thousands of variables not related to traditional credit scores to determine credit risk. According to its founders, it was big data for a bigger cause (below you can see Merrill discussing ZestCash with Ryan Kim at our Structure: Data event).

The shift in business is probably a good idea — at least in theory. As Hardy’s article notes, ZestCash was having a hard time obtaining state licenses to operate, and also had an uphill battle in gaining mindshare against payday loan lenders that have physical locations spread across nearly every city in the country. Informing payday loan customers that ZestCash existed in the first place was likely hard enough, but nothing compared with getting them to use the service.

Hence ZestFinance, a move that wisely fuses the growing trends of data platforms and analytic services. It’s one thing to have the data (or, in ZestFinance’s case, know where to find it) that can benefit another company, but it’s yet another to have the data-science chops to actually analyze it in a useful manner. ZestFinance has both and so, it seems, is poised for success if it can amass a pool of loan-provider customers that see the value in assessing risk based on actual data points and algorithms rather than relying on an exclusionary FICO process or a hit-or-miss paycheck analysis. In the end, better assessment of risk could lead to products that benefit both lenders and borrowers.

However, if ZestFinance was indeed founded with a noble goal in mind, its shift into an underwriting service would seem to increase the chances of it becoming an enabler of ever-more-predatory lending practices as it deals with a customer base of payday lenders and credit-card companies. There’s a classic fear, for example, that as soon as insurance companies are able to start collecting and analyzing our web footprints, they’ll start to use them against us by denying coverage or jacking up rates. Landlords in large cities are already running complex analyses to ensure they’re charging as much as the market will allow for their rental properties, potentially leaving existing tenants and all but the highest-paid apartment hunters out in the cold.

No one at ZestFinance was available for a comment today, but I intend to speak with the company soon to discuss its new business model. Big data is a powerful tool and ZestFinance certainly knows how to harness it, but it’s easy to see how things could go wrong when applying those techniques in a field already teetering on the edge of what many consider ethical.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A near-term outlook for big data
• Will Hadoop Vendors Profit from Banks’ Big Data Woes?
• Health care and big data in 2012

(L to R) Lew Tucker, VP and CTO, Cisco; Serban Simu, co-founder and VP of Engineering, Aspera; Haseeb Budhani, Chief Products Officer, Infineta Systems
(c)2012 Pinar Ozger pinar@pinarozger.com

One option is to simply move the application closer to the data. NYSE Euronext has built out its own data centers in New Jersey and London in order to be close to its principal exchanges and customers, said Ken Barnes, SVP and global head of platforms of NYSE Technologies. At first, that proximity was necessary for latency reasons – in the securities trading business, milliseconds count – but NYSE finds that the issue of bandwidth is now becoming its bigger concern as its customers move massive amounts information in and out of its data centers.

Aspera co-founder and VP of engineering Serban Simu pointed out that kind of co-location might work well for financial services where both data and its users are concentrated in a few centers, but it doesn’t work for other industries, such as healthcare, where hospitals, research institutions, millions of doctors and billions of patients are distributed around the world. A medical researcher collecting or analyzing data overseas for a university located in the U.S. faces a bandwidth problem.

Even if we are able to move applications closer to datasets or move databases closer to the cloud computing resources that use them, any information collected or analyses performed in one location will always be useful somewhere else, said Haseeb Budhani, product VP at Infineta.

We’re generating data far faster than we can move it, and the more we generate the more immobile it will become, said Lew Tucker, VP and CTO at Cisco Systems “Data does have inertia,” he said. “It tends to stay where it’s originally put.” He proposed that data analysis will eventually adopt a distributed computing model. Fields that deal with a huge quantities, such as genomic research, will collect and an pre-process their data locally and the pass more refined datasets to other distributed data centers. The video industry solved its bandwidth distribution problem by introducing the content delivery network (CDN), he said, why can’t other data analysis do the same?

Check out the rest of our Structure 2012 coverage, as well as the live stream, here.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Health care and big data in 2012
• The promise of SDNs in the enterprise
• A near-term outlook for big data

The San Mateo, Calif. company is formally launching its payment platform today, offering developers not just the ability to accept credit card and other payments, but to also hold the funds in stored accounts and move funds around between financial institutions, all in compliance with regulatory requirements. With its set of APIs, BancBox is trying to help companies without financial expertise create a new set of applications from gifting apps and e-wallets to light banking services and collaborative consumption apps.

The idea, said CEO Sanj Goyle, is to provide a payment back-end that works like Amazon Web Services, allowing developers to concentrate on their products without having to think about the payment integration details. In essence, BancBox is integrating with banks so its developer clients don’t have to.

BancBox, which launched a beta last month, is built around three services:

• It can accept payments from credit card, wire transfers, ACH, checks, wires and moneygrams, and multi-party transactions. That’s not so different from other developer services that make it easy for apps to process payments.
• BancBox works with banking partners to create stored accounts so a developer’s money can be held safely, with full ledgering, account reconciliation and FDIC insurance. This is helpful for apps that take in money from users but don’t use it right away. For example, a collaborative consumption service can hold on to payments and allocate them to multiple sellers over the course of weeks or months.
• After receiving the money, BancBox can send it directly or through various channels such as ACH, checks, e-bill payment services, PayPal or other services. That makes it easy to transmit money to and from different bank accounts. BancBox, for example, is working with a company called ReadyForZero, which helps people reduce their debt by storing money and automatically routing cash to various debtors.

“Some others make it easy for ecommerce companies to collect payments and they make that process simple and elegant,” said Goyle. “But our belief is that’s the starting point. After you collect funds, you need to be able to hold it, store it and send it. You need to have a technology and regulatory solution to do that.”

The regulatory point is important, said Goyle. Many apps are storing and sending funds but they don’t necessarily adhere to the different regulatory rules of each state. Getting a license to transmit money across all 50 states can cost more than $1 million, he said. Since BancBox works with existing banks on money movement, it meets the various regulatory standards so developers don’t have to acquire licenses or maintain PCI compliance.

BancBox has been around for five years and first developed payment services for itself. But over the last 18 months, it’s been working on extending those services to developers with its APIs. The company, which has been profitable with its legacy business and expects to be cash-flow positive with its new service in 12 months, has raised a little more than $11 million in funding, including $6 million in 2009, when Baseline Ventures, Floodgate, Harrison Metal Capital and Founder Collective invested.

I think Bancbox is poised to do well, because it brings real disruption to the banking world by making payments and more sophisticated financial transactions easy for app developers. That can lead to more compelling commerce and payment apps, but it could also mean more apps that offer real banking services, kind of like banking start-up Simple. Personal finance services could also become much more versatile, not just tracking spending but now helping people move money automatically into savings accounts or transferring funds to the debtors.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The evolution of the virtual goods market
• GigaOM Research highs and lows from CES 2013
• How HR can make the case for workforce analytics