The financial services industry is in the midst of tremendous change. Consumer expectations have shifted and organizations are using new innovations to meet their customers' needs. Regulatory changes have also caused financial organizations to rethink the ways they collect and process data. Added to this is competition from new fintech companies to create new growth opportunities.
The financial industry is very data-intensive. This data is often created in separate departments, creating information silos. When teams work together, data is shared and replicated across multiple teams, regions and departments. This creates friction, increases costs and makes moving data very complex. The challenge for many established companies is that past infrastructure was not built to meet the demands of the financial industry to query and leverage data for meaningful insights.
So what are the key ways for financial organizations to get more value from data? We list three.
The amount of reporting requirements has increased exponentially over the past decade. This has led to increased complexity and greater security challenges for companies. Regulators have higher expectations of companies for risk mitigation and transparency. Today's technology makes it easier to store, capture and analyze data. Therefore, regulators are demanding additional information because it is now possible to demand more documentation and transparency.
Many companies in the industry opted for a short-term tactical quick fix, but this has increased operational risk and increased the likelihood of fines. Compliance departments have therefore spent years creating reporting processes, managing inconsistent data sets, maintaining outdated data stores and, most importantly, monitoring different levels of governance. For a large global bank or asset manager, this fragmented and manual approach to data management and analysis is not sustainable, given the scale of the processes and the fact that they have to be compliant in multiple countries.
Financial services firms must prepare for more robust reporting to meet the ever-changing regulatory landscape. With the governance and security capabilities of a modern cloud, managing data across teams becomes easier and it is easier to achieve the data requirements.
This replaces old and inconsistent data with a centralized data architecture that provides a single source of truth.
Financial organizations have been relatively slow in using consumer data to provide them with a better experience. Currently, the pursuit of greater visibility and getting a 360-degree view of consumer behavior is central to financial services firms. Consumers want good digital experiences that respond to their desire for simplicity and convenience. New regulations, such as PSD2 and open banking rules, have also caused customers to expect more in that area.
Financial professionals are increasingly looking to data to support ongoing relationship management with their clients. Wealth management organizations can digitize the investment process - from finding clients to managing accounts and offering customized plans. Effective use of data in this sector can lead to more time for advisors that can be spent retaining key clients through better personalized services
With increasing stakeholder pressure and climate issues, companies are being forced to prioritize sustainability. To understand, evaluate and take action on the sustainability issue, companies need access to technology that provides holistic ESG data capabilities and solutions.
Financial firms are collecting large datasets from the public sector, including government reports, scientific bodies and private sector reports, to understand and address the climate challenge. Companies are rushing to acquire datasets to meet ESG and sustainability criteria needed to evaluate impact and make progress against their own promises.
Asset managers use sustainability criteria such as exposure to carbon-intensive companies to make investment decisions. Banks look at ESG risks for corporate portfolios, and insurance companies use ESG data to assess climate risk and transition risks when underwriting. There are several use cases for teams dealing with ESG data: from portfolio construction to financial planning to regulatory reporting.
With cloud-native solutions, companies can leverage off-the-shelf query data across established datasets in the marketplace. They can then share that data between teams in a secure, controlled way - with greater speed to market. It also allows organizations to address the need for scalable analytics and access a data ecosystem to build their own ESG applications for different user and workflow requirements.
Investment in data and technology continues to increase to meet the current and future demands of the financial services industry. As organizations strengthen their operations, they increase their value to all their stakeholders. With a better data strategy, companies can think about how to improve operational efficiency, increase consumer appeal through a better customer experience or mitigate risk. The path to business value creation will involve business and digital transformation as companies modernize their operations with technology and data innovation through cloud-native solutions.
Thanks to data cloud technology, companies are better equipped to respond to future challenges and opportunities. Companies can be central to shared data ecosystems while maintaining the security and control they need. It helps financial services companies create the infrastructure needed to survive in a changing industry and world.
