Data is being used to transform almost every industry, and in financial services alone, banks are sitting on a goldmine of data. Big Data. Which comes fast, in big numbers, and in all flavors and colors. They obviously own a lot of internal data, both structured and unstructured: from transactions, e-mail logs, loan portfolios, website clickstreams or risk assessments.
When these are mixed with external data, even richer insights follow. Like the information coming from social media, the smart grid or even weather reports. Just imagine what kind of customized services an insurance bank could offer if they leverage insights from mobile geo-location data.
Yet many banks still mostly focus on internal processes, on operational efficiency, on cleaning up legacy systems or on responding to regulatory requirements. These measures may be essential, but banks will have to move beyond them. This is because their business models are being disrupted, as we speak, by competitors coming from the most unexpected sides.
They are no longer players just like them, with legacy systems to upkeep, rules to follow and margins to think of—they are young wolves with one great idea, the digital savvy-ness to bring it cheap and fast to the consumer and nothing to lose. They are also coming from other markets, with a fresh, new view on what money really is, and how it should be handled. They are like Google in the launch of mobile wallet, PayPal and the Bitcoin phenomenon, or the sharing economy with its ‘crowd fund’ projects on peer-to-peer platforms.
To survive this revolution, banks have to use their latest asset, information, to understand how they can serve their customers in the best way. They can do this in two ways:
1. By using data to fight cyber crime and win the consumers’ trust back: tracking events in real time for anomalies, offering behavioral authentication or ‘reading’ content in chat forums to uncover new fraud methods.
2. By using data to drive a 360 degree, customer-centric approach: recognizing them immediately on any channel, offering them a better mobile experience or enabling a far-reaching analysis of their customers’ spending behavior and how it impacts their savings.
Many banks will face big challenges before they can tap into the power of Big Data. Too many data silos, spread over too many departments (57% of respondents in a Capgemini study) and the shortage of people that are skilled in data analytics (40% of respondents in a Capgemini study) being the most important ones. But more and more seem to understand that Big Data is no longer “just an option”. 90% of North American financial institutions for instance think that successful big data initiatives will define the winners of the future.
So, the real question is: will you be one of those winners?