Financial Institution Reinvention

by Joseph Walent 0

Transitioning data management and governance from a static to fluid approach while retaining and enhancing data protections is one of the hurdles financial institutions have to negotiate to ensure relevance to consumers. The article helps to outline one approach to what will essentially be a wholesale reinvention for many FIs.

The best data warehouse, analytics, and visualization solutions alone do not enable banks to successfully integrate data analytics. Banks must start with a vision for use of data analytics within the company—including organization, and processes—before moving on to tools. This is where culture comes into play versus just approving another project on the IT steering committee agenda. Leaders that get the value of analytics start with engaging business units across the bank in development and execution of the vision, ensuring sound governance and data management processes are in place, and acquiring and developing the necessary skill sets.

Making it clear what is necessary is a change of fundamentals that can be undertaken with a full scale tear-down / rebuild effort, once committed the upside of data as an asset comes to light. The benefit of being a better financial partner to customers becomes easier, as the FI has many of the pieces to extrapolate current behavior and where small gains may be realized in aiding customers’ financial journey.

By proactively managing data as an asset, banks can unlock the power of data and tools for risk management purposes by augmenting them with additional data and modeling to generate insights that can be used to acquire, cross sell to, and retain customers. Data in these kinds of organizations is used to understand how customers “feel,” as Ray Davis, chairman of $25 billion-assets Umpqua Bank, has observed, and ultimately to understand how they actually behave and buy. Under Davis, Umpqua recently established a subsidiary, Pivotus Ventures, which among other things has been acquiring talent to further expand its capabilities in data science and advanced analytics.

Mercator Advisory Group anticipates FIs across the value scale will be undertaking varying degrees of reinvention efforts to better leverage the data they currently have stored to better manage the service delivery efforts in order to secure relevance with consumers as banking and payments quickly evolves on digital platforms. Our recent report Banking as a Platform: API Technology Presents Opportunity to Financial Institutions further outlines how FIs and Fintech will increasingly collaborate to deliver personalized consumer experiences.

Overview by Joseph Walent, Associate Director, Customer Interactions Advisory Service at Mercator Advisory Group

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