Can the Financial Services Industry Take Their Data to the Bank?

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Last week I had the chance to travel to New York City for an executive briefing on big data. In the financial services industry, we know that data is the business. Market volatility and regulatory demands are making data more strategic than ever before to the industry. The availability of new data types, such as online customer reviews, customer sentiment analysis, socio-political events, or macro-economic trends is providing a compass of sorts, helping risk managers improve their oversight of risk positions and regulatory compliance, and giving CMOs a better understanding of customer preferences. 

In recent years, we’ve seen two key roles in financial institutions rise to the forefront of business strategy: the Chief Risk Office, and the Chief Marketing Office. Although facing different priorities, these two executive offices have a common area of interest as they work to transform the financial services business: data analytics. While the CIO’s office continues to be just as important as before (maybe even more so as disruptive technology and consumerization trends reshape IT priorities), the industry is fast realizing that bringing data-driven insight to every decision maker in a financial institution in a timely manner can have a transformative impact.

Microsoft recently commissioned an IDC study (results in infographic below) to better understand what businesses globally—including the financial sector—stand to gain by propagating such a data culture across their organization. The numbers were almost unreal. 

  • Over the next four years, the research showed that financial services institutions and related companies worldwide have the potential to gain more than $309 billion in value over a four year period from data, or what we call the “data dividend.” 
  • Of that amount,$131 billionof value is forecast to come through improvements in areas such as human capital, IT optimization and regulatory compliance measures – including risk management.

 

 

Realizing the full potential of this data dividend will require that financial institutions no longer settle for status quo. As conversations in the C-suite of major financial services organizations begin to take off about how to get more “data smart”, a few guiding principles to keep in mind below: 

  1. Take your data to school: There is a difference between the raw data that lives within an institution’s data repositories, and actionable insight that can help drive business outcomes. This nuance is especially critical in making decisions for banks, capital markets firms and insurance companies that are seeking to monetize data by building new services, better understand customer preferences and risk scenarios.
  2. Power (BI) to the People: To fully tap the “data dividend” that our IDC study projected for the financial services industry, data-driven decision making needs to travel out of C-Suite and IT hallways and into every corner of your organization. This is where tools like PowerBI in Microsoft Office 365 can help deliver on the promise of self-service BI.  Although IT must retain control of data, bringing tools for analysis and interpretation of insights to the hands of business users and served up through applications they’re already familiar with (such as Excel) can help foster a data culture across your entire organization.
  3. Don’t Start with a Big Data Solution Looking for a Big Data Problem: It’s easy to get caught in the big data hype and embark on ambitious technology investments that you have to justify while you’re looking for a problem to solve. Thinking about data management and what can be collected in an enterprise data warehouse is akin to putting the cart before the horse. Start, instead, by identifying key business problems where data-driven insight could drive the biggest impact. That exercise should very quickly help you identify what are the missing technology and data pieces in your puzzle.  
  4. Choose Your Data Platform Wisely: Any big data initiative you take on will serve multiple masters. Your IT organization will care about security, risk compliance, scalability, elasticity and overall robustness of the data platform you choose to build on. The C-Suite will want to be able to work with a single source of truth that provides the most comprehensive, end-to-end, consumable view of business health and risk. And business decision makers will prioritize ease of interpretation of data above all else so they can deftly build key learnings and takeaways into future recommendations. By choosing a modern, cloud-based data analytics solutions that covers your needs comprehensively—from cloud data storage to analytics to data visualization capabilities in familiar productivity tools, all employees can participate in fulfilling your company’s vision.

 Whatever your business imperative, the right data—big, small, or any other kind—surfaced at the right time and with the right decision maker to drive impactful action is your ticket to a piece of the $309 billion data dividend opportunity that our IDC study identified. Unsure where to start? See how Microsoft’s big data and analytics solutions can enable your business transformation here.