“In the financial services world, ‘currency’ is not an unfamiliar word. But data is the new currency in the digitally driven business world. It is the financial services industry’s most important commodity and something all financial services organisations should pay heed to,” writes Informatica’s Peter Ku.
In fact, FSIs hold more data than any other type of organisation. Data is a by-product of every customer interaction, and financial services organisations are both heavy producers and users of data. However, good data does not come easily.
In an industry like financial services, many different systems and applications are built over the years, operating within the front-, mid- and back-office, with new technologies introduced to replace old systems, adding more layers and architectures to their existing legacy landscape. These new and old data sources are adding more voluminous data and creating more siloed data, and even ‘dirty’ data that could potentially cause great financial losses and reputational damage to the organisation.
If FSIs can discover valuable insights from this data goldmine, they can progress beyond mere transactions to build true lasting relationships with their clients. After all, customers increasingly desire a service partner for life rather than just a one-off business transaction. And, critically, creating innovative products and offering the right services to grow wallet share all starts with knowing who your customer is and what they really want.
Let us examine the key imperatives FSIs face today and how their organisation can fully unleash the power of data to fuel business growth and build resilience.
Improving customer experience: Traditionally, FSIs were mainly concerned with their service quality and if they were complying with industry rules and regulations. However, the financial services landscape has changed with the rise of modern, digital-native fintechs and licensed digital banks.
Traditional FSIs are now struggling to innovate with new products and services and are challenged with the “always-on” model to optimise customer engagement and interaction as well as trying to bring their portfolio of offerings seamlessly across different omnichannel to increase personalised service. As such, FSIs require a holistic, 360 degree-view of the business, from customer service and sales to financial advisers and insurance agents, to access clean, trusted, and valid data that supports customer engagement, and delivers seamless, predictive, contextual, and frictionless customer experiences.
Growing the business: As stiff competition grows, FSIs are under tremendous pressure to look for ways to differentiate their offerings, cutting through the noise and maintaining market viability. They need to identify new cross-selling opportunities to expand wallet share, to drive revenue streams, and to retain customer relationships.
The uncertainties arising from the Covid-19 pandemic as well as rising inflation, for instance, have vastly impacted people’s financial wellbeing. Creating superior experiences and enabling services that can more easily help customers in managing and improving their financial wellbeing are key differentiators, and attention to customer needs when hardship hits will be important. Having to understand each customer relationship with clean, trusted, and holistic data is therefore key for FSIs in finding new sources of revenue within their existing clientele base.
Strengthening risk management: Unpredictable events like Covid-19 and the Russia-Ukraine crisis have brought to the fore rising risks and uncertainties for businesses, including FSIs. Combined with the ever increasingly complex regulatory mandates, FSIs are facing immense pressures from these external forces. Any oversights or misinformed decisions would mean greater financial losses to the organisation. As such, FSIs are increasingly looking at data and technology solutions to identify, measure, manage and monitor risk across enterprise scale for ongoing credit, market, operational, and liquidity risk management needs, while enabling compliance teams to work on clean, valid, and transparent data for regulatory reporting.
Increasing business agility: The recent events of the Covid-19 pandemic have accelerated the uptake of cloud technology for business continuity. Cloud offers agility, scalability, efficiency, and security that are required for customers who are expecting immediacy to their service demand.
According to a study by Accenture, 60 per cent of surveyed banking clients are using more than one cloud service provider and more than half have embraced a multi-cloud strategy. The response to time-sensitive business opportunities and competitive threats, identifying and mitigating risk exposures, combating fraud, to responding to customer service requests swiftly, are the reasons why data and cloud need to work in synergy to enable customers to transact in confidence and at ease.
Suncorp Group’s Beverley Paratchek, principal, data governance, sums this up exceptionally well in a recent report, Data and Analytics Trends in Financial Services by Corinium in partnership with Informatica:
“Data is a transformation driver. It’s a core pillar of any strategy and there’s always an opportunity to uplift across the full data analytics value chain, whether it be [to] capture, keep, create [or] activate value. The need to grow the business, remain compliant, improve agility, manage risk and be agile have been significant drivers of digital transformation within financial services.”
The time is now for FSIs to put data and cloud to work to turn data into actionable insights. To operationalise data at scale across the organisation, FSIs will need more than just roles and skillsets.
Enabling an intelligent, cloud-native data management platform to harness the data is what FSIs need to advance, accelerate, and succeed in their digital transformation.
Peter Ku is VP & Chief Industry Strategist for Financial Services at Informatica, an enterprise cloud data management company. He has spent over 25 years helping financial institutions understand how to leverage technology to accelerate business growth, comply with regulations, combat fraud, and improve business efficiencies.