Are bankers setting themselves up for failure again?
Data is exciting, especially in today’s day and age. It’s something that can help you totally understand your audience, the market, and the world around you. For the first time ever, you get the whole picture – the big picture, thanks to data.
In the world of financial services, data can do wonders, especially because banks have access to critical and sensitive data, and people give it to them willingly. They also have access to information about the market, and plenty of it is available in the public domain. Unfortunately, bankers aren’t using this data effectively. In fact, many aren’t doing much with it at all.
According to an Accenture report published recently, banks have always held a large volume of confidential data and are increasingly adding data from external, unstructured sources.
However, while more than nine in 10 (94 percent) of the bankers surveyed said they are confident in the integrity of the sources of their data, the report found that half of the bankers aren’t doing enough to validate and ensure data quality: 11 percent trust their data is reliable, but don’t validate it; 16 percent try to validate their data, but aren’t sure of the quality; and 24 percent validate the data, but recognize they should do a lot more to ensure the quality.
Further, while five in six bankers (84 percent) said they increasingly use data to drive critical and automated decision-making, more than three-quarters (78 percent) of those surveyed believe that these automated systems create new risks, such as fake data, external data manipulation and inherent bias.
This raises the question – what are bankers doing with all the data they have, and are they missing the opportunities that data creates?
Fortunately, there are a few examples of banks and financial institutions actually making use of data to transform their business. It can help boost cybersecurity and cultivate customer loyalty, for example.
“Data offers the intelligence to make sure what the client is being offered by the bank has value and relevance to their choices,” said Sam Kumar, Global Head of Analytics, Standard Chartered Bank to the BBC recently.
Smart banks like Standard Chartered are using customer data to personalize the customer’s banking experience by leveraging the data they have on them to understand and proactively offer them solutions that are right for their needs.
“Let’s say a client is shopping at a shopping centre, and we see the credit card transaction come in. We have the ability to analyze that data in real time, including where he spent the money and on what kind of merchandise,” explained Kumar.
Say the client likes to spend money on fashion, jewelry, and coffee at Starbucks and Standard Chartered has a set of offers that are available in that location that might be of value to him. Thanks to the speed and convenience enabled by big data, the bank can send him the offers right away and strengthen its relationship with the client.
In the same vein, good analytics should mean a customer receives only offers that are relevant to that individual, based on spending patterns and personal preferences – and not blanket marketing campaigns via text alerts or emails that have no relevance to the individual consumer.
There are examples of other banks working on leveraging customer and market data to become smarter and more efficient, but industry-wide action is needed. Banks that fail to capitalize on data today won’t survive tomorrow.