by Jason Young
When you hear today’s “it” term—big data—does it make you feel overwhelmed, or do you see an immense opportunity for growth?
I hope it’s the latter, because that’s what big data will mean for those financial institutions that learn to harness its potential to track customer behavior—and marry it with activity. In doing so, they can take their volumes of existing data and drill down to discover many customer-centric ways of increasing profitability, whether bankwide or targeted to each individual customer.
According to a September 2013 Gartner survey, 64 percent of business respondents either have already invested in big data technology, or will do so within the next 24 months—and the banking industry was among the top three spenders last year. Further, cumulative big data spending for the period from 2011 through 2016 is projected to top more than $232 billion. Clearly, big data has made the shift from a buzz term surrounded by lots of questions, to a mechanism for redefining the playing field.
Financial institutions can leverage this new technology and its advanced analytics and predictive marketing tools to capitalize on big data, craft superior customer experiences and gain the competitive edge. Toward that end, automated solutions are emerging to help financial institutions draw powerful insight from their masses of customer data. Using such robust features as customizable dashboards and reporting functions, cross-application research capabilities, trend analyses and historical views, banks can gain a 360˚ view of their landscape and better predict which products, services and decisions will have the most positive effect on their bottom line.
With big data solutions, the customer information is better organized and accessible, allowing users to analyze information—across functions and transactions, products and services—in any manner they choose. These tailored analytics can be saved, shared and accessed daily.
In addition, dashboards provide at-a-glance views of an institution’s daily and monthly activities through trending reports and charts—and can even provide “what if” illustrations. For example, a bank could determine how its bottom line would be affected if 10 percent of its loans defaulted.
But don’t expect these dashboards and analyses alone to increase profitability. Institutions must implement them to their fullest potential and act upon the vital information gained to efficiently derive answers and make decisions that not only drive profitability, but also reduce costs. For instance, you can perform an analysis of your branches to determine when teller lines are busiest, and staff your branches accordingly. Or analyze whether a certain type of loan is likely to help—or hurt—your cost-to-income ratios.
Big data can be your friend, or your foe. This year will set the tone for which institutions successfully examine their volumes of information to attract, retain and better serve customers—and rise above the competition.
Jason Young serves as product manager for CSI NuPoint. He is responsible for overseeing CSI’s robust suite of business intelligence solutions, including Financial Dashboard and Relationship Pricing. Jason holds a diverse banking background, having served as a credit analyst/underwriter as well as a commercial relationship manager prior to joining CSI. His experience gives him a unique perspective on the impact data and technology can have on profitability and success.
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