What will the future of banking look like, and what must banks do to remain competitive? The key lies in becoming a data-driven bank capable of extracting maximum value from customer data, in order to anticipate their financial needs and offer them personalized products and services based on their interests.
The article What the Data-Driven Bank of the Future Looks Like published by The Financial Brand, focuses on two fundamental aspects of banking data: “One, the data housed in most financial institutions is often not easily shared within different parts of the organization and two, today’s consumers and small businesses have financial relationships with more banking providers than ever — many of them nonbank companies — making secure and efficient data sharing increasingly a core competency.”
Data-driven banks understand the potential of data to support growth through strategic decision making that impacts the entire organization.
For Marc Alcón, CTO of Latinia, the financial industry must move “towards a more interconnected banking model with better integration of third-party systems with Open Banking ecosystems in Fintech, to provide the sector with greater interoperability, in turn generating more business opportunities for the sector”.
And how to give shape to this new model for the industry, one based on technological innovation and led by data-driven banks? “Data is critical in enabling multiple use-cases for open banking, banking-as-a-service (BaaS) and the closely related concept of embedded banking”, explica Ritesh Agarwal, partner at McKinsey, en el artículo de The Financial Brand. “Data aggregators connect with a range of financial institutions to assemble customer financial data and then provide this data and analytics to both bank and non-bank clients so that these companies can train their risk models and provide personalized recommendations.”
The client, at the center of a data-driven bank
The challenge of improving client experience continues to be crucial for the banking industry. KPMG’s recent report Future of Commercial Banking, states that “80% of commercial banking decision-makers believe that customer centricity is a high priority, only 47 percent of banks are exceeding customer expectations and just 15 percent exceed them consistently”.
The sheer volume of information that banks collect represents a very significant competitive advantage, and allows banks to deepen their relationships with customers, personalizing their digital experience and communicating with them through insight-based messaging. “API-enabled service architectures link existing bank data and client information to deliver enhanced services to customers. The use of APIs will enable new collaborations and partnerships across banks, digital banking companies and fintechs. With reduced barriers to entry, new cloud-based lending services can be quickly operationalized”, points out the KPMG report.
In this sense, the financial sector’s commitment to efficient data management and open banking models will also drive improvement of client experience by facilitating personalization, omnichannel and real-time communication.
“If a bank wants to stay on the vanguard and ahead of its competitors, it must prioritize data management and integration. Data-driven banks will be able to make better strategic decisions and successfully tackle the transformation process that the sector is undergoing, through strong synergies and alliances,” concludes Marc Alcón.