Data is a huge problem in the financial services industry. The two main roadblocks are 1) getting the data curated into one place; and 2) cleaning the data and keeping it clean. Banks have started to work on the former issue, making some progress with data quality and integration, but there’s still significant work to be done on all fronts.
To tackle data curation, bankers must understand the source of their data. Data can be stored in core and ancillary systems – systems which often don’t integrate well. Disparate systems have created a barrier to truly understanding customers, and while there’s a substantial need to move toward a cohesive data system, it’s easier said than done.
In an ideal world, banks would overhaul legacy systems with modern and adaptable infrastructure. Having been in the banking industry for more than four decades, there are several reasons why bankers might be hesitant to update or completely overhaul their systems.
Investing in solutions that create holistic, curated, intelligent information is not cheap. It can require a substantial budget, dedicated time, and resources. Updating a legacy system requires an “all hands-on deck” approach from everyone at the bank, especially the IT department. It’s a short term hurdle, but the outcome yields great returns.
Fintechs often have the edge over banks for this exact reason; they’re incredible with data and have the infrastructure in place because it’s their lifeblood. (This isn’t to say that all fintechs excel at this.) It’s not too late for banks to get up to speed with non-traditional competitors, but the window of opportunity is closing. Customers are appreciative of the bespoke-level of service that data offers them, and they want that personal experience for their finances.
Once system integrations are in place, bankers need to clean their data and keep it clean. As data’s purpose escalated from record keeping to customer service and revenue generation, the need for solid intelligence has peaked.
Cleaning data can be overwhelming, but the key is to start. Focus on cleaning a particular set of data and then applying a data validation and cleansing routine that runs on a regular basis. The only way to keep your data clean is to use it often. This needs to be an enterprise-wide mindset shift.
Once banking data has been integrated and curated with accurate and clean client information from all data sources, advanced intelligence may be applied to it to identify opportunities that benefit clients and shareholders. Intelligence comes in many forms. One form is householding and grouping data, which can combine customer data across disparate systems to provide an accurate view of their financial needs and relationship.
Customer behavior provides another form of intelligence that provides insights to product usage across all bank products in one experience to help bankers develop deeper relationships, outside of their typical transactions and preferred delivery channels.
Clean data that is query-able across disparate systems can present bankers with revenue opportunities. It can determine the pricing and profitability of customers, thus improving the banks’ performance and increasing shareholder value. Plus, incorporating a bank’s FTP, capital, expected loss, and expenses from finance systems, adding interest and fee information from the core system data and building account level profitability allow reconciliations to the general ledger.
Banks that put time and effort into maximizing their data can better understand customers and identify new revenue opportunities. A holistic, curated, intelligent information environment can help bankers improve client and shareholder value. An environment where data is the priority enables banks to realize opportunities through simplicity, execution, and accountability.
Bob Kottler is executive vice president and chief revenue officer of White Clay, a fintech that provides a user-friendly experience to help bankers increase profitability, drive team performance and manage relationships. In this role, he is responsible for building bank relationships and uncovering partnership opportunities.