Balances in Financial Services Sectors

This week’s episode focuses on the data required three major financial services sectors, Financial Markets, Banking, and Insurance, focusing on the need for various balances, and length of time in perspectives.

  • Financial Markets–effective any traded financial asset–typically has the highest turnover in data, and perhaps the lowest need for balances of various types.  Trades may be made and sold frequently; transactions may not be accumulated much except to give total positions in assets classes; yes, certainly data is accumulated into financial reports for customers and the enterprise, but the number of cuts of data may be relatively low and the volatility of those cuts may in fact be pretty high.  Some types of trading have very high volumes.
  • Banking–Banking perspectives are typically longer term; loans are often made with terms measures in years, and customers typically do not transfer depository accounts to new institutions frequently.  The asset held is typically simply currency; not inventories items like stocks or bonds, etc.  Thus Banking typically has a need for more balances, covering long time periods.  Banking may not have as high transaction volume as some types of trading, but higher volumes than insurance.
  • Insurance–Insurance often has the longest time horizon of all, as insurance is bought to cover (hopefully) infrequently occurring events.  Transaction volumes tend to be lower than banking because insurance is only paid for often every six months and claimed against every few years quite often.  Thus the need for balances in insurance may be higher.

Ironically though, because transaction volumes are lower in insurance, the need for balances can also actually be lower as well, as balances are used simply to tune computing resources in order to provide perspectives as of a point in time.

This is Episode 165 of Conversations with Kip, the best financial system vlog there is. Literally learn more–about ledgers and financial systems–at

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