Data is increasingly being seen by financial services firms the world over as a secret weapon in their fight for survival. According to McKinsey’s Analytics in Banking: Time to Realize the Value research, almost every participant in a survey of global banks had advanced analytics in its list of top five priorities for the year ahead.
Used correctly, data can unlock a wealth of opportunities – helping banks to get closer to their customers and, through the delivery of more personalized services, significantly increase revenues. A few organizations are already seeing these rewards. The McKinsey research said that these leaders have built substantial foundations by establishing data lakes and centers of excellence and using machine-learning techniques. They have spent hundreds of millions on their data (especially risk data) and on compliance. For them, advanced analytics is becoming a reflex action, with commensurate rewards of about €300 million in additional annual profit.
However, success appears to be reserved for the pioneering few. The McKinsey research notes that, while more than 90% of the top 50 banks around the world are using advanced analytics, most are having one-off successes and can’t scale up. They have invested significantly in data infrastructure (mostly as a result of regulation) and experimented with advanced analytics techniques (mostly through specialized teams loosely connected to the corporate center). But the expected results have not arrived. A few banks have yet to begin.
Nonetheless, some leaders are emerging. The McKinsey research found that such banks invest in talent through graduate programs. They partner with firms that specialize in analytics and have committed themselves to making strategic investments to bolster their analytics capabilities. “Within a couple of years, these leaders may be able develop a critical advantage,” the research report says. “Where they go, others must follow – and the sooner the better because success will come, more than anything else, from real-world experience.”
Keywords : Cybersecurity/Authentication , Digital marketing , Compliance/Regulation , Big data