Financial services organisations are facing an unprecedented influx of data – sourced from an ever-increasing array of chatbots, smart ATMs and payments platforms at the front-end to critical digital support systems at the back.

While enthusiasts envision ‘rivers of gold’ unleashed by swelling data lakes – data that could deliver a wellspring of inspiration for next-generation platforms and infrastructure – critical analytics models and algorithms (necessary to deciphering these datasets) are too often failing to unearth these digital nuggets, leaving a wash of unstructured data in their wake.

Erich Gerber, TIBCO’s General Manager, Asia Pacific and Japan* and resident analytics expert, has written extensively on the data surge inundating today’s businesses, and the stifling impact of data illiteracy on an increasingly digital-centric corporate world. Here, he reveals the groundwork that FSIs must lay in order to effectively utilise these – largely untapped – data reserves, and the increasing importance of data scientists in unearthing valuable insights from voluminous datasets.

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FST Media: Walk me through how insights from big data and analytics are shaping today’s financial services institutions. How successfully are industry players leveraging these insights?

Gerber: My personal opinion is that FSIs still underestimate the threat coming from more agile environments and contenders they don’t perceive as taking business away from them. It’s therefore imperative that FSIs take the benefit of the value created from the data they capture.

But there are a few things to unpack here. For one, the only way you can really get smart about the data you have is when you bring it into a single unified view, accessible in real-time; that’s because data today is generated from an exponentially greater number of sources. If you consider IoT devices, cloud, and fintech applications, their internal systems are obviously mobile applications – if you don’t get the technology right to capture this data in real-time, then you may end up looking at things that aren’t relevant to your business. Critically, because changes occur in real-time – essentially by the second or millisecond – you can’t depend on human interfaces alone.

And that’s where I see some financial services institutions getting it right – or at least they’re on the right path – in not taking a single approach. Other banks and insurers have installed fancy CIOs or CDOs (chief digital officers) who develop ‘cool apps’, take it to the press, and automatically rate it as an innovation. But all they’ve basically done is inject a bit of botox into the system. What they really need to be doing is hard surgery, because they’ve been growing as an organisation for decades and there’s a lot of legacy in their systems.

FST Media: Banks and financial services are generating exponentially greater volumes of data today, sourced through ATMs, mobile banking apps, payment services, chatbots, and any number of front- and back-end systems. How can FSIs best manage these increasing data loads and leverage these insights to enhance business operations?

Gerber: You’ve got to be able to consolidate these data generators and have a unified view to it – and that’s not easy.

TIBCO has been in the business of integration for three decades. In the FSI space, we originally started off with what was, at the time, a very complex task: integrating 20 or 30 different internal systems and making sure messages exchanged across these systems were captured in a unified view.

Today, it’s a much more complex task. You’ve got to think about all the other data-generating systems. For example, you want to be able to connect the dots when someone gets to an ATM: who the customer is, their history with your institution, what you want to understand about their payments history, perhaps something about their household view – there’s all sorts of data available. After you’ve connected the dots, you want to be able to extend something to them to encourage them to do more business with you. If you don’t have that holistic view, you will never be able to run a smart analytics campaign on it.

FST Media: What is the single biggest hurdle preventing FSIs from effectively utilising their data assets, particularly for business decision making and customer service innovation?

Gerber: For me, the single most important quality in business is culture – and it’s not even cultural change, because that’s essentially become a permanent state of affairs. For organisations to succeed today, they need a culture of agility. If you’re not standing on very agile feet, you’ll never be able to pivot to where the next change requires you.

I see the biggest hurdle laying with enterprise, because there are still many CXOs out there who probably don’t think they need to understand technology, simply because of the way they’ve been brought up, the way they’ve made their careers, or even just being part of that old boys’ network. While it’s sometimes good to have an old boys’ network – I may be one myself – they’re not going to be around forever and, after that, you’ll be left with nothing. While I don’t think CEOs should come to work in shorts and T-shirts, they do need to break with tradition, and that’s not what I’m seeing in many places. So, for me, establishing an agile culture is critical.

FST Media: Data science has taken on greater precedence within today’s digital-centric business environments. How important is today’s data scientist in the FSI space, and how you see their jobs evolving?

Gerber: Traditionally, a data scientist is someone that can develop models around advanced analytics. From here, organisations can establish a process that allows a machine to learn and even decide on a course of action. Of course, while ‘advanced analytics’ helps to visualise what’s happening right now, it’ll never get you to the point where you’re able to predict what will happen, and what you need to think about, next; that’s the secret to making the needle move for an organisation.  

The first and most obvious thing to observe is that there aren’t enough data scientists; there is a massive overdemand to what supply can deliver. However, the sector is making efforts to meet this demand. In Singapore, for instance, there are a number of tertiary institutions that practice data science as a dedicated field, so we will eventually see more talent coming into the market. But right now, there aren’t enough of them.

There’s also an evident shortage of data science skills within FSI, and that’s where we get into the topic of ‘citizen data scientists’ – a concept Gartner has been discussing for quite some time and something I’ve also addressed myself. Essentially, we’re talking about lightweight, second-tier workers who are able to pick up certain tasks that are typically performed by dedicated data scientists; this offers organisation some breathing space despite the increasing influx of data. But it’s really a band-aid solution to help businesses bridge the gap over the next five years.

And while it may seem a little dramatic, if you don’t have data scientists these days, you’ll never be able to fulfil the tasks that are being demanded of an organisation to benefit from the data that you own.

FST Media: Data siloing remains a critical concern for financial services with legacy infrastructure. How can FSIs avoid data siloing and ensure analytics insights can be read, transmitted, and implemented across the business?

Gerber: I’ll preface this by saying FSIs must have a comprehensive process on adopting an analytics model – and that starts with access to their data. Financial services institutions must have a consolidated view, and to be able to wrangle it, because there’s a lot of unusable data that we want to avoid getting into the analysis phase. From there, we can create the model – and this is where our data scientist comes into play.

Once you have that model, you get to the actionable part. This is where you want run predictions – which is, essentially, a mathematical process. But it’s not like looking at a crystal ball, where you want to predict what will happen next; if you have an outcome that is telling you that this is either a threat or an opportunity, you need to decide whether to act upon it. And again, these processes are happening at a fraction of a second; it’s not realistic to expect that a human interface could make all those decisions and act upon them. So, you’ve got to be able to build up your process in a way that a machine can act upon them based on the business model you have in place.

From there, crucially, they need to monitor what has happened based on those actions. More important still, they need to feed that back into how the model is set up. It’s about maintaining the integrity of your model and, by doing so, you’ll avoid data siloing. Obviously, if you allow multiple analytics officers or system owners to have a ‘Great Wall’ between them, that’ll never work. Ultimately, it has to be a holistic view.

FST Media: What do you see as the next technological game changer for the financial services industry? 

Gerber: That’s, of course, an evergreen question. I would say blockchain, although that’s probably not even the next ‘big thing’, because everyone is already talking about it. Nevertheless, it’s obvious that blockchain will have an enormous impact on the financial services industry. I think the sheer fact that you’ll be able to transfer money through fintech players without using a bank, that in itself has a massive disruptive potential. I would advise every CEO of a bank to take these fintechs very seriously and make an effort to collaborate rather than try to just fight them off, because they won’t just go away.

I personally think – though I’m no expert – that the next big technological game changer will be artificial intelligence (AI) – and that extends beyond the financial services industry. We’ve already seen what AI can do today, effectively eradicating call centres through machines, and we’ve all understood that with technology over the last few decades, the flywheel keeps spinning faster and faster. That was a bit of a wakeup call for what AI really can do and it’s obvious there will be a lot more coming.

FSIs will probably want to adopt some of these changes. But there’s also a lot of risk involved because, when dealing with money, customers place enormous value on trust; I believe that only comes with a human kind of touch. You cannot completely avoid having a human interface to gain trust, but I think AI is going to be a massive game changer for all of us.

FST Media: What defines a ‘data smart’ institution today? What steps should FSIs take to become data intelligent organisations?  

Gerber: We’re facing a situation where we can only be smart about data when we are able to connect to it all. FSIs need to have the right infrastructure in place to tell you what’s out there, what’s being generated, and how it looks. If they don’t, they’ll essentially be analysing a wrong or an incomplete picture.

Secondly, I feel as though a lot of FSIs are happy with what they’ve achieved too fast. To my mind, it’s not done with a couple of cool app releases; it’s a process and a transformation that needs to be owned and managed in a comprehensive way – something that’s not being done today and probably will never be done.

Thirdly, it’s all about people; they ultimately drive the process. While I made a point about AI – and that will probably take over some tasks – it’s the people who drive this process on the organisation’s side – those primarily at the CXO level, but also data scientists, digital transformation officers, etcetera. But on the other side, there’s also the customers, and we should not forget that it’s all about their own experience and how they value that.

Increasingly, regulators will allow a lot more competition to enter the market, and traditional players and consumers will be constantly approached by a competitive offer. It used to be that a customer would stay with a bank for 20,30 or 40 years, or even a lifetime; today, this is put to the test on a daily basis. If you have one bad experience, or if someone else can offer a much better deal, the likelihood is that this consumer will jump. We’ve got to make sure that we keep customers happy; after all, it’s all about their experience.

*Gerber is currently transitioning to a new role at TIBCO, expected to be announced shortly.