DATA OPPORTUNITY: How banks can take a different approach to leveraging their most valuable asset

Part 2: The Opportunity and Approach

What’s the prize for being data driven?

Data is the biggest asset that any bank has. With digitization in both front-office and back-office activities, the amount of data that a bank produces have increased exponentially. This has also created new opportunities for how the data can be used by banks. What was not possible even a few years back is possible today and new uses of data are constantly being developed.?

The uses of data, analytics and AI can be broadly organized into three categories.

These use cases combined can increase a bank's bottom line by 3 to 5% annually or 26% by 2030. This is a global opportunity of US$ 15.7 trillion for all sectors that can be unlocked using data, analytics and AI, according to a study by PwC

1. Protect banks: Data plays a crucial role in protecting banks. Credit, fraud, cyber, balance sheet management, trading and actuarial valuations have been heavy users of data. Traditionally the amount of data used was small and in most cases the techniques that were used were mathematical or statistical in nature. With the advent of big data and machine learning techniques, there is an opportunity to improve the traditional techniques and type of data used.
2. Grow banks: Multiple product offerings and multi-channel interactions have made client knowledge fragmented in banks. Data is the only way to get a complete picture of the client and increase relevance in their interactions and marketing offers across channels. This knowledge will drive revenue growth and increase in client loyalty. Data is imperative in helping banks remain relevant to their clients and increase their revenue and customer experience.
3. Make banks efficient: Banks also have an opportunity to run their operations efficiently through the use of data. Optimization of both front and back-office functions do present an opportunity for most banks; however, these opportunities are much smaller compared to the benefits data can provide to both de-risk and grow the business.

Data presents a huge opportunity for banks. This is an opportunity that can’t be ignored, as these capabilities will become table stakes in the coming years. In order to gain a competitive advantage and be future-ready, banks need to start investing in data today.

A new approach to unlocking the power of data

There’s a better way to unlock the value of data and enable banks to become data driven. Our approach is anchored in building trust, empowering the organization to leverage this valuable asset. Here are the five keys to success:

1. Invest in cybersecurity, monitoring & governance capabilities to build trust and confidence in using your data: The biggest challenge banks face today is how to secure their data. Cybersecurity threats are getting larger and more sophisticated. Protecting your data is a prerequisite in being able to use it and leverage it. Investing in advanced data monitoring capabilities can both protect and liberate the data for consumption. The data journey for any bank starts with building trust in data. This is done through cyber security, data monitoring and data privacy / governance practices.?
2. Invest in leveraging third party data through a well-developed data strategy: Most banks are focused on storing and using data that their own systems produce (1st party data). Having a robust data strategy and leveraging data outside of banks can be key in driving much deeper insights. There are a number of data aggregators in the market that banks can leverage. This will enable both “protect banks” and “grow banks” use cases.
3. Hire and train for data-driven decision-making: Having data-driven decision-making is a mindset that is needed for all executives. This is something they need to both hire for and train in their executive ranks. Putting executives through a robust training program will help their key decision makers better leverage data to drive success. Bank leaders need to be data-driven to enable the organization to adopt that mindset.
4. Modernize your technology stack: Modernizing the technology stack will provide exponential benefits to the bank from being data driven. This is not limited to data storage, but all systems. The priority is product and channel systems. The newer technologies have more advanced data capabilities that help integrate the data more seamlessly. Ensuring there is proper integration of data into both front-office and back-office systems is key to deploying insights.
5. Focus on consuming and deploying insights, not developing them:?Banks have traditionally invested in large analytics teams that have produced insights that banks have found difficult to deploy. Banks need to rethink the operating model on how they develop and deploy insights. The fast pace of change that is sweeping the field of data & analytics has meant that most banks have struggled to keep up with the pace of change. They are caught using old technologies and tools and face challenges attracting the top analytics talent that they need. Banks are users of insights, and they should focus on that. They need to partner with market leading analytics organizations to help them produce insights at speed and at scale. This has both a cost and a business benefit to the banks.?

How can PwC help?

At PwC, we have the expertise to help you identify the best way to unlock the business value of your data. Now’s the time to be bold and take a different approach. We’ll support you along the journey with human-led, tech-powered solutions that’ll position you to seize the opportunities investing in your data will bring.

If you’re interested in learning more, let’s connect.

In my upcoming blogs I will dive deeper into the various components of the approach outlined. In the next blog we will discuss on how we can develop trust.

Part 1: The Challenge