As a former bank CEO, I would have loved the sophistication of today’s data analytics. In just the last decade, data analytics has evolved from a helpful tool to a predominant force guiding every business decision.
Today’s most progressive, proactive and high-performing banks have all weaved data analytics and business intelligence (BI) into the fabric of their decision-making processes. In fact, big data is driving the modern enterprise to the point where no financial institution can afford to ignore its power. With companies of all types and sizes developing BI plans, Gartner estimates that investments in BI and analytics software will eclipse $22.8 million by the end of 2020.
Not only do banks need BI, they need to use it to its full potential. There is enormous potential for BI to transform banking delivery systems to adapt to how customers, and prospects, want to do their banking. To make the data work in meaningful, deliberate ways, banks need BI to put otherwise separate data points into perspective by analyzing them against their key performance indicators (KPIs). Without the full picture, banks use incomplete and inaccurate information, resulting in ineffective decision-making.
Banks that collect customer, product and service performance data — and then use that data to accommodate current needs and predict future needs — can groom loyal, profitable customers.
Three major indicators that your financial institution needs a BI plan are:
< You collect data, but don’t know what to do with it.
< You don’t know where to find your data because information is siloed in different locations, such as multiple operating systems like Fiserv, lead-generation platforms like SalesForce, and loan origination software like FIS.
< You have lots of data (from sales, marketing and internet technology), but no integration among systems. In fact, one banking executive is currently integrating seven operations systems into one central data warehouse.
A BI plan removes these uncertainties by improving the quality and efficiency of data gathering, sorting, and analysis processes. You can see a clear, comprehensive picture of your KPIs in real time, providing an accurate financial snapshot you can use to make educated decisions. As a result, you can positively impact your marketing, operations, and profitability.
Once a real-time dashboard is implemented, executives have access and visibility to data points relative to KPIs. Information that would normally take days or weeks to compile from multiple departments and software systems within the bank will display on one screen together. Decision makers can filter information with the click of a mouse, allowing them to identify and analyze trends easily.
BI helps financial institutions:
Reduce costs and improve productivity. Data gives financial institutions an opportunity to see how factors in their business affect their profitability. In turn, those insights can inform executives on how to improve their processes, ultimately resulting in reduced operational costs and improved profitability.
Attract new customers. Today, using data analytics and programmatic marketing to examine each step of the buyer’s journey creates a personalized, highly targeted prospect engagement.
Deepen existing relationships. BI combines data from multiple systems that do not typically interact, creating a more complete picture of the customer buying cycle and their behavior. For example, BI can layer customer behavioral data over website analytics to gauge the effectiveness of your company’s web presence, from the user experience to design and content.
Banks equipped with BI will be well-positioned to make data-driven decisions that improve how they relate to customers, build efficiencies into their operations, and maintain profitable, sustainable relationships.
Ray Melcher is executive vice president of financial strategy with Anderson Group and leads the relationship with Pennsylvania Bankers Association as a select vendor. He provides business value assessments, strategic planning, and business performance consulting services. He can be reached at firstname.lastname@example.org.