In the digital transformation era, banks must keep up with the technology stacks advancing the financial sector. From SaaS to cloud databases, today’s fintechs are already reshaping their data strategies to improve customer experience and internal operations. To compete, banks must also update their data infrastructures to ensure long-term profitability.
According to Oracle and Asia Risk, 66% of global banking executives consider aligning financial performance and risk data critical to success—but this is often said without fully comprehending how to align this data. Additionally, the banking sector already faces many challenges, including the incompatibility of newer technology with legacy systems, the ever-shifting nature of regulatory compliance protocol, and data silos. Taking substantial steps towards digital transformation like their fintech counterparts is easier said than done.
A great way to move towards a data-driven approach is using a master data management platform (MDM). These centralized data hubs can give banks the ability to improve data governance, customer experience, and cybersecurity through one unified platform. Banks that lean into digital acceleration with new technology will gain a competitive advantage and create a more scalable infrastructure.
The future of banking is data-driven. Here are three reasons why.
Improves Data Governance
MDM platforms improve data governance for banks by streamlining internal processes. This includes eliminating data duplicates and silos that make communication and collaboration across teams difficult.
We helped the American Association of Insurance Services (AAIS) improve its data governance strategies by providing them with a flexible database for all employees to use. Although this example is in the insurance space, AAIS collects and organizes millions of records, a fundamental similarity to the banking industry. Working atop its data lake, the MDM platform helped AAIS communicate data intelligence across all parts of its organization.
This centralization of data helps streamline communications by ensuring that each division of an organization has a single source of truth.
This creates an alignment in understanding, reduces inconsistencies and inaccuracies that arise from inconsistent data or incompatible data formats, and it creates real-time value for daily operations. A result of this enterprisewide data alignment beyond increased efficiency and accuracy—scalability.
The banks that build a solid tech stack and data infrastructure are the ones that will be able to scale as data complexities, consumer expectations, and compliance regulations continue to shift and adapt to modern times.
Builds Customer Relationships
Banks need a comprehensive understanding of their customers backed by data. MDM platforms allow banks to provide better services by offering robust analytics focused on their customers’ needs. As a result, hyper-personalization, defined as “the most advanced way brands can tailor their marketing to individual customers,” can occur.
In the context of banking, financial institutions can build better relationships with their customers by using these analytics to create content and policies that are relevant to them. Some ideas may include tailored pricing, AI chatbots, or initiatives that empower clients to be proactive with their finances.
According to JD Power, this type of personalization is what customers want. 46% say that they would like tailored help to avoid extra fees, and an additional 37% expressed an interest in receiving account alerts to help them manage their money better. A data-driven future will allow banks to learn more about their customers and increase retention rates.
All businesses, regardless of industry, must pay special attention to cybersecurity concerns in this day and age—but this is especially pertinent for the finance sector. Breaches and glitches that go undetected can cause massive fallout, affecting the organization itself as well as its many clients. Data-driven tools can minimize risk and help organizations comply with increasingly stringent security regulations. In addition, a hub for centralized data can make it easier to spot concerning trends and implement holistic security strategies that utilize AI, machine learning, and blockchain technology to protect important records from security breaches.
Banks must ask themselves the following questions when enhancing their risk management strategies:
- Do our present systems put us at greater risk for cyberattacks?
- What are our cybersecurity priorities?
- How do we measure our cybersecurity performance?
- Does our data give us the whole picture?
MDM platforms can answer all of these questions, and, as a result, banks can make essential decisions faster thanks to trustworthy data insights.
Data-driven innovations are opening up new possibilities for banks in 2022. However, one question remains: is the banking industry ready to take control of its future?
Asaf Darash is the founder and CEO of Brett Hansen is Chief Marketing Officer at Semarchy, responsible for leading go-to-market strategy for the rapidly growing data company. Prior to joining Semarchy, Brett was CMO at Logi Analytics through its acquisition and integration. He also held marketing and product executive positions at Dell Technologies and IBM. He holds a Bachelor of Science in Economics and History from James Madison University as well as an MBA in Marketing from the University of Montana.