Financial services institutions are the original big data pioneers. Long before 'big data' was a popular technology buzzword, financial services companies were producing, processing, and storing more data than any other industry. Data is their most important asset, yet many financial institutions still struggle to squeeze meaningful value from their data.
So why are banks still struggling to achieve the promise of big data? There are many potential explanations: the overwhelming number and variety of legacy data sources; complicated mergers and acquisitions; data stores designed for processing speed at the expense of functionality; issues with security and efficiency; and sustained IT focus on core banking applications. Regardless of these challenges, business units still need analytics to do their jobs. As a result, business users have had to take on the bulk of the responsibility themselves, primarily as a manual task. Institutions that continue to take an infrastructure-first approach to big data will continue to fall behind, while those that focus on empowering their employees with analytics capabilities will thrive.
Uncovering the value of big data and turning it into a competitive advantage requires tools that deliver strong analytic capabilities, intuitive data exploration, and access to a broad range of data sources and types. By leveraging big data analytics, financial institutions can develop customer profitability and clienteling applications—which will add immediate and long term value. Bottom line benefits can include improved customer risk-based pricing, better cross-sell and up-sell results, an enhanced customer experience, improved retention, and increased profitability. Internally, operational, servicing, and marketing improvements can include better segmentation for more relevant offers and product recommendations, more effective front office customer engagements, customized client servicing, and a shift from a product to customer-focused business.
Customer profitability, operational efficiency, and regulatory compliance are the three key drivers of success for a financial institution. The challenge is to balance and optimize these competing internal factors in the midst of a rapidly and constantly changing industry. Merely collecting big data is not enough—financial services companies need to embrace analytics in order to turn their big data into a real world competitive edge.