Last week bobsguide provided insights into cryptocurrencies, a key topic up for discussion at Sibos 2014. This week, bobsguide delves deeper into another highly discussed topic that will be featured at the global conference, big data. Organisations are beginning to accept that if they don’t start using their customer data (financial institutions in particular) they are in danger of losing their customers to new competition. Many financial institutions have started to adopt big data projects and are more willing to tackle the vast datasets that they have acquired to find the valuable information that will benefit their customers.
Big data provides businesses with the opportunity to make sense of the vast amounts of structured and unstructured data that they usually cannot understand or process. Banks in particular have the opportunity to transform their relationship with their customers by utilising customer data and they could use this data as a means of nurturing these relationships on a one-to-one basis. By understanding and using big data, banks can offer specialised services, offers, loans and loyalty rewards to customers that they actually want to receive. According to CGI’s Understanding Financial Consumers in the Digital Era survey, consumers want to feel valued and rewarded for their business, they want a more personalised experience and 79% of customers already expect banks to use their data to offer improved products, offers and advice to them.
According to Lawrence Leyden (Director Transaction Banking for EMEA, SAP), banks need to consider how people are going to be buying in the future and this requires not only using transaction history but also using unstructured data from social media. Banks need to understand the data and then make decisions about it, and those that don’t use their customer data will be at a huge competitive disadvantage to new entrants and banks that can make the transition will have greater success.
Big data also provides opportunities within the organisation such as, integration, reporting and mitigating risk. Debra Walton (Chief Content Officer, Thomson Reuters) believes that by marrying public and proprietary data companies can:
- Find new sources of alpha
- Benchmark performance
- Integrate CRM systems to improve prospecting and client service
- Mitigate risk and manage regulation and compliance
According to Walton, big data represents an opportunity for firms to innovative, go beyond traditional sources of data to gain an advantage. Years ago the challenge was access to information. Today there is an explosion of data, but accessing it is less of a problem than understanding it and mining its potential.
Although big data presents lots of opportunities, many organisations are finding it difficult to use the data once it has been mined. It is this lack of understanding and knowledge that is standing in the way of many banks overcoming new entrants into the market. According to Matthew Dent (CEO, Volta Data Centres), 'Big Data' for business has recently been receiving much positive attention. Underlying the buzz, however, lay key challenges in the ability to transform the sheer volume of data into value, for overall profit and thus success of the business. Dent believes that where big data is housed is vital to the success of big data projects. The main considerations to housing 'Big Data', (outside of actual processing of data) include: scalability in terms of both physical space and power resources in the event of expansion; flexibility (and opportunity) to connect to outside networks and partners; latency, in terms of the ability to manage data in real time; and data security. By collocating IT infrastructure to an outsourced data centre with the right attributes and solutions, these considerations are automatically dealt with.
Cost is also a major factor for many companies when it comes to big data technology adoption. Dent believes that many firms are constantly seeking out increasingly efficient and cost-effective solutions such as the utilisation of cloud and carrier neutral data centres. He believes that hybrid collocation solutions combine quality infrastructure with the Cloud and that by choosing a convenient central location is also part of a smart decision as lengthy traveling can result in non-productive use of time and hidden costs. Dent states that the right data centre, just like a suitable home, can help an organisation to better prepare in the harnessing of data, and better realise the promise of Big Data in this new era.
Social media data
Digitalisation has meant that many organisations, including retail banks are gaining more information about their customers through social media and the unstructured data that websites such as Twitter and Facebook provide. The data collected by social media could enable companies to offer more tailored services to their customers, once they know more about their life, their family, friends and upcoming milestones such as marriage, buying a house and having children etc. Messaging platform Twitter is already threatening the banking industry by encouraging users to make purchases via a ‘Buy Now’ button and isn’t predicted to be the last messaging platform to become a competitor in the payments industry. Many more non-financial companies are beginning to emerge as direct competition for banks and banks could achieve greater competitive advantage from collaborating with social media platforms and utilising the data that they can provide. Walton states that at Thompson Reuters, social media is a big area clients are looking to mine as predictors of future performance.
According to Christophe Langlois (Global Head of Social Media & Social Business Development, Visable Banking), there is a perception about social media that it is limited to marketing brands, paid media and campaigns, however, social media is transformational if done well. Banks can engage with customers via social media but there are difficulties establishing the ‘real’ profile of that customer. Banks have to use the right tools and technology to make sense of their unstructured data and turn it into intelligence to improve and transform their organisation. By using social media data, organisations have the ability to connect with their customers via social media in an automated way and market to them depending on what stage in their life that they are currently at. However, the challenge from a regulatory point of view is whether organisations are actually allowed to use this data.
Where do companies stand now?
According to an Accenture worldwide survey of senior technology and business executives, many companies have completed at least one big data project that they are happy with. 60% of executives said their companies have successfully completed a big data implementation, 36% haven’t pursued a big data project yet and 4% are currently pursuing their first big data project. 89% rated big data as “very important” or “extremely important” to their businesses’ digital transformation and 89% also believe big data will revolutionise business operations in the same way the Internet did.
By Nicole Miskelly, bobsguide Lead Journalist
Don’t miss Sibos Topic 3 next week…