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12 Jan

Rhomiela Diafante

Associate Consultant

This post originally appeared on Deluxe by Alan Jackson


What could be more important to your bottom line than your balance sheet? Could anything have a greater impact on a financial institution’s ability to survive, thrive and grow? Apparently, yes.

Data and analytics are the name of the game

Information is rapidly ascending as the greatest asset a financial company can have – at least that’s the fundamental premise of a report by global management consulting firm Oliver Wyman.

In “A Money and Information Business: The State of the Financial Services Industry 2013,” the author, Aaron Fine from Oliver Wyman, points to the growth of data availability and the increase in analysis and sharing tools as transformative factors for the financial services industry, including banks.

They argue that in order to remain viable, banks and other financial institutions will need to become information businesses, rather than continuing to operate as mere money businesses. Changing consumer expectations, behaviors and needs – and changes in the marketplace – mean financial institutions that fail to make this shift will ultimately fail entirely.

Some financial services companies have already made the transition, but not as thoroughly as they need to, the report says. Others haven’t transitioned at all and are finding themselves struggling under pressure to maintain or increase near-term earnings, and to justify their current business models in an ever-evolving marketplace.

Financial institutions have lagged behind other industries in making more effective use of information, the report’s authors state. The beginning of the information age coincided with a boom period for financial institutions. Nascent technology meant little information was available, and what could be obtained was costly and of little use. A booming economy meant banks could afford some mistakes.

Information is plentiful in 2014

In 2014, however, the information landscape has changed significantly. Information is cheaper than ever, easier to obtain and banks already collect a treasure trove of data they simply aren’t using as effectively as they could.

What’s more, increased competition, a shifting regulatory environment, changing customer expectations, and economic uncertainty mean mistakes – such as failing to adequately use the most powerful growth tool available – can cost a financial institution dearly.

Consider this illustration offered in the report. Banks already accumulate vast quantities of data on consumer payments and deposits. When analyzed and combined with other data such as social and search, that information can provide financial institutions with insight into a myriad of opportunities including offers, cross-selling, loan targeting and more.

The report points to the growth of global telecoms as an example of the potential before financial institutions. The five largest telecoms cited each started out basically offering one type of product or service, but then leveraged information to branch their business into adjacent opportunities. Thus, an online bookseller expands its operation into a variety of retail sites, and a search engine grows its business to encompass mobile devices.

The report urges caution and vigilance for traditional money businesses that contract with outside parties for data and analytics. The authors remind us that outsourcing the work of data gathering and manipulation for the purpose of making decisions for your organization does not absolve you of responsibility for the outcomes of those data-driven decisions.



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