Data in All the Right Places

In the push to deliver more meaningful customer experiences, the role of data has gained increasing importance in the last few years. Wholesale transformation continues to unfold across the industry and as the role of digitisation continues to evolve and consumer needs increase in complexity, data is being used as a golden nugget to drive meaningful change across both internal operations, as well as the end user experience. But whilst many are investing at scale in this area, how can data truly be used for the greatest impact?

A priority from the top

In the shift to embracing a more intelligence-led operational approach, the answer lies in making data a strategic asset. Often for larger financial institutions, the disconnect comes when there is a misalignment between their data strategy and the overall business strategy, essentially inhibiting cross-pollination of value across the organisation.  Fintechs have solved this problem by building data into their proposition from the ground-up - but are yet to scale up and truly capitalise on this.

Some traditional financial institutions are simply not built to manage data and are often balancing conflicting priorities and focuses. Efficiency drives and streamlined operations - alongside increasingly complex governance and regulation - have become resource vacuums, often leaving minimal time for investment in strategic data shifts.  However, despite this squeeze on operating models, we are seeing a clear mindset shift across the industry, with a recognition that data management and analytical insights are foundational to business transformation, customer success and competitive advantage.    

The right data foundation

The data itself however is only half of the equation. Gathering and accessing customer data is typically not the problem, after all financial institutions naturally hold rich customer information.  The difficulty comes when deciding how best to use the information. Analysing, interpreting and applying the data to the relevant parts of your organisation is where the path to success becomes more complex.

Adopting a data driven culture across the organisation is the game changer for this, supported by significant developments in technology and innovation. The coming of age of artificial intelligence and extensive cloud capabilities are certainly removing some previous barriers and enabling giant leaps ahead in the application of data analytics. Creating a 360 view of data across the organisation and developing analytical maturity has certainly shown it can be the platform for sustainable growth and better business decisions.

Can you really monetise data?

With the power of data in mind, exactly how should data be used for maximum benefit? It could be argued that its application should mainly be internal, with data insights helping to improve how an organisation operates and manages risk. An example of this is predictive analytics, where forward looking insights can help financial institutions make informed and risk-savvy decisions on loans and investments. 

External applications can also provide opportunities for an enhanced customer experience and potentially new revenue streams; but are customers really willing to pay for it? This is debatable depending on the scenario and the competitive landscape. In some cases, providing a more contextualised and relevant customer journey may be necessary to protect market share and brand loyalty – enabling organisations to actually compete on data analysis as a skill.

In other applications, data could be mapped against a customer’s financial landscape to identify life goals and substantial monetary decisions. By anticipating needs in advance in this way, the potential to offer tangible value to the customer – both practically and financially – can be significant. New products can be unlocked, and data can even be baked into service offerings, enabling customers to be more informed, and therefore more comfortable, responding to both real time events and more weighty decisions.

For full effect, a joined-up approach across the wider ecosystem is also needed and this presents a sizeable challenge. Harmonizing data across acquirers, financial institutions, payments providers and card schemes is a significant undertaking, and we are far from achieving such collaboration. For now, it is more likely we will see pockets of success as the power of data continues to be embraced and integrated across the industry.