Why banks must leverage the power of data
Banks are operating in a different environment as compared to 10 years ago. Today, banks are faced with a myriad of challenges – intense competition from traditional and nontraditional competitors, low interest rate environment, changing customer expectations and behaviours, fraud, high operating costs and stringent regulations. Faced with these challenges, smarter banks are turning to Business Intelligence and Analytics to stay competitive and profitable.
With the digital era now upon us we are now creating as much data in two days as we did from the dawn of man through 20031. IDC reports that the digital universe is doubling every two years, and will reach 40,000 exabytes (40 trillion gigabytes) by 2020.2 With 25% of all business data being generated by the financial services sector this means that the banking industry is data rich.
Data is one of the most invaluable weapons financial institutions have at their disposal in today’s digital landscape.”
Banks of all sizes capture masses of data, capable of providing much insight into the operational and financial aspects of the business, as well as into the customer. If made accessible, analysed and used effectively, this data can provide significant competitive differentiation and transform the ways banks understand and engage with their customers.
It is well know that in the digital era, consumer behaviour and expectation is not the same as it used to be – the customer is now in control. For banks to succeed in this new digital era they have to become more customer centric and gain a much deeper insight into the customer behaviours, traits and needs. Banks must leverage the power of the data that they have to do this.
Yet, for this to happen, data has to be analysed and acted upon, and many banks are struggling to do this. A recent Gartner study has revealed that only 7% of the data collected by business is analysed. This has in large part been due to the lack of resources and tools available to access the data let alone to be able to perform any effective analysis and then act upon it.
For Banks to unleash the power of their data they need to invest in a business intelligence and analytic solution. This will enable banks to expose, access and analyse the data that is potentially the lifeblood of their business and could be the deciding factor of their future success.
The power of data analytics
Data-driven organisations are more profitable and productive than their peers. These companies optimise the data they hold by leveraging four types of analytics in their decision-making processes.
These are descriptive (what happened); diagnostic (why did it happen); predictive (what will happen), and prescriptive (what should I do about it). Together, these capabilities provide financial institutions with an enhanced understanding of customers and assist in building customer relationships, devising strategies and rolling out successful marketing campaigns. A data-driven organisation approaches maturity when it can successfully leverage all of these...