Despite its high profile and buzzword status – in practice, big data and analytics continues to be underutilised and less than adequately applied by a number of financial services businesses. With such wide recognition, why are companies still missing a trick?
Historically, data was most often used as a statement of fact – what has happened, in line with archaic benchmarks. Moreover, businesses have had their hands full maintaining accurate customer records. Even today, many continue to grapple with poor quality, fragmented records that result from inefficient processes, proprietary IT environments and multiple, incompatible record keeping systems. This fragmentation of customer information makes analysing data on a wide scale an extremely formidable task and means firms could be missing opportunities.
Increasingly, the industry is recognising that to realise the value of big data analytics, companies must first address the quality of their data. Combing multiple sources to enhance the information available delivers opportunities both for internal efficiencies and with customers. In response to concerns voiced by regulators, TISA has established a data quality executive committee to develop guidelines to ensure that customers’ data is accurate, is regularly maintained and is adequately protected.
Until relatively recently, another barrier to big data and its analytics was the prohibitive cost of collecting, maintaining and storing large amounts of customer information. Traditionally, businesses have kept customer and financial transactional data only. Other data, including process data, was either discarded or never recorded in the first place.
Yet, process related data, which tells the story of how a customer interacts with the service provider, is a vital piece of the big data picture for fund management companies and D2C platforms. Information about the preferred communication channel and the way in which the customer navigated to the point of transacting can provide valuable insight in understanding the client base. Knowing which products they have and therefore which others might be suitable can point to new business opportunities.
Advances in technology mean it is now both practical and affordable for financial services companies to gather, maintain and save large amounts of data. This opens the door for companies to analyse the full range of data to its potential. The steady uptake of online and mobile service delivery has further enriched process data, providing a data stream that enables the service provider to track each customer interaction down to the key stroke. But it comes down to having a clear plan for using this data.
This is where, the true value of big data and analytics lies, in leveraging an enhanced understanding, of customer behaviours and demographics – to effectively meet their needs. Astute fund management companies and D2C platforms are utilising big data and analytics to achieve true customer centricity in this way. In essence they seek to complete the circle – from gathering, collating and maintaining comprehensive customer information, to analysing and interpreting what it means. Then it is fed back to the customers in order to optimise the customer experience and ensure informed quality investment decision making.
In the years ahead, companies who make the effort to complete the big data circle will not only best serve their customers’ short and long-term investment needs. They will also be richly rewarded for doing so with an unprecedented competitive edge in an increasingly crowded marketplace.