Big data will be central to combating disruptive technology competitive giants, according to industry observers.

According to Jeff Cotrupe, Industry Director, Big Data and Analytics at Stratecast and Frost & Sullivan, financial services organisations in Asia need to work out how to use the vast amounts of data to keep up with technology giants disrupting the financial services sector.

A key challenge financial services organisations face is how to use the data they collect through a combination of social, mobile, analytics and cloud whilst adhering to regulatory restrictions across the region.

According to Cotrupe, we are seeing a paradigm shift occur in the financial services space, with the risk of being disrupted being similar to what the retail industry has seen in the last few years.

“The banks might become one of the bricks-and-mortar retailers that cannot keep up with the likes of Facebook and Amazon, so they better get out there,” he said.

For most organisations, obtaining the data is not difficult, as it is built up through years of service to customers, but the challenge lies in using analytics to make sense of the data, something Cotrupe points out banks already have at their fingertips.

“The other side of big data, which has been sitting there all along, is internal. The encouraging thing for the banks from this aspect is that they have a lot of information already… this is the internal side of big data and they just need to figure out how to capture it.”

In Indonesia, Bank Muamalat is investing in building an ecosystem around big data in order to become more personalised and customer-centric, according to Adi Haryadi, E-Business Management and Analytic Division Head, Bank Muamalat Indonesia Tbk.

“We have begun to enhance the quality of our data sources, while we are also in the process of building our data warehouse. This is in line with our plan on building an IT infrastructure and applications and build on our IT people. This is the ecosystem that we must have to enable us to be more personalised to the customer,” he said.

For banks, the process of capturing and understanding big data is important in creating effective security and anti-fraud measures, DBS Bank in Singapore has found that advanced analytics helps in managing business risks more effectively, according to Olivier Crespin, Chief Operating Officer, Consumer Banking Group & Chief Data Officer, DBS Bank.

“In the past the bank was heavily reliant on the alertness of staff handling transactions on a case-by-case basis…Such techniques are now much less likely to succeed because analytical engines are now developed to detect unusual transaction patterns and linkages across a much larger set of transactional data from across multiple channels and sources,” Crespin said. This allows the bank to focus its resources on exceptions with greater precision and results.

In addition to this, banks must look to using data and analytics in a structured way to create compelling products and services for their customers, and marketing these products in a targeted and personal way, as Cotrupe says, taking the services to the customer, rather than waiting for the customer to come to the bank.

This is especially important for counterparts in the insurance industry, where there is a wealth of untapped data and information about the customer. According to Matthias de Ferrieres, GI Chief Marketing Officer – Regional Head of Marketing, AXA, the insurance industry is traditionally data miners, but models need to change in order to keep the customer at the forefront of what they offer, however he admits the industry has been late on this move.

“We are characteristic data miners but we need to move to a behavioural data expertise. We need to collect, steer and score data that will help us understand purchasing and spending behaviour, social attitude and habits,” he said.

It is also not just banks who are feeling the pressure of non-traditional players entering the financial services industry, with the likes of Amazon and Alibaba already entering the payments space, and rumours of Facebook acquiring a banking license, even the insurance industry needs to act before losing out to technology giants who have a better handle on understanding data.

“Our IT infrastructure is and remains very process and product centric. We have few systems that collect customer behavioural data. We will have to invest and do it fast. If we do not, other industries that specialise in data mining, like Facebook, will very soon take over the opportunities that we have as an insurer,” according to de Ferrieres.