Data to secure a competitive edge
Data has transformed from being an under-utilised resource, often left sitting on siloed systems, to becoming an essential asset for businesses looking to better understand customers and offer the best service possible.
Banks, Fintech firms and their partners, collect massive amounts of customer information every single day. Each new customer offers access to powerful data-points that can be analysed to create more personalised products and services. The power of data may be clear, but extracting the most value from this prized asset is no simple task.
Unlocking value
Real-time analytics solutions make once complex analysis simple. From analysing vast amounts of transactions looking for patterns, to predicting future consumer behaviours; there are few areas of financial organisations that wouldn’t benefit from improved data analysis.
When creating a new product for customers, instead of relying on market research and opinion, financial organisations could interrogate the data they have to offer services that are tailored to exactly what customers want. From account openings, contactless payments and application history, countless consumer touch-points now exist.
Real-time analytics mean that information from a range of places can be brought together and staff can be armed with the most accurate knowledge about their customers. Employees won’t have to guess at what a customer wants but use data-driven insights around financial health and behaviour, to connect them with offers and services they are more likely to be receptive to.
According to analysis by consulting firm McKinsley, nations that introduce data sharing for finance could see GDP gains of between 1% and 5% by 2030. Not only will national economies benefit, but consumers and financial institutions alike will gain from open financial data.
Privacy challenges
Considerations around customer privacy and cybersecurity, as well as ensuring regulations are met, are just a few of the barriers that financial institutions need to overcome if they are to leverage data. Putting a comprehensive data collection system in place is likely to be the first step for forward-thinking businesses, as low quality data results in low quality insights.
Holding often sensitive customer information requires strong protections to be in place to ensure that the risk of a cyber attack remains low. Customers, too, should be aware of how their data is being used. Without a high-level of transparency, there may be a customer backlash, especially at a time of growing privacy concerns.
In an increasingly competitive environment, where digital-first start-ups are forcing incumbents to innovate, taking a data-centric approach is vital for financial firms that want to stay competitive and meet customers needs more closely.
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Written by Finbarr Toesland, Editorial Contributor, VC Innovations
The conversation continues at the Future Identity Festival 2022, co-located with the Fintech Talents Festival on the 14th – 15th November, at The Brewery, London.
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