By Vimal Venkatram, Country Manager, Snowflake India
Data is a vital component of the financial services industry as it empowers everything from retail banking to insurance claims to online payments. That is why the financial services industry is one of the sectors most heavily invested in technologies related to data management. IDC expects big data technology and service-related revenues to grow with a five-year CAGR of 15.6% over the forecast period of 2019-24 in APAC. Banking was a top vertical of the overall Big Data Analytics market in 2020, according to the study.
Despite the importance of data and the significant investments made in data management, financial institutions are challenged with leveraging the massive volumes of information at their disposal to glean insights and improve decision-making. Data silos, caused by disparate legacy systems and strict data privacy regulations, prevent quick access to high-quality information.
By utilizing the Data Cloud, financial sector companies can gain the performance, simplicity, flexibility, and concurrency needed to leverage and monetize vast amounts of valuable, untapped data.
The modern data approach can help financial services companies better serve customers, decrease risks, and increase profits.
1. DELIVERING SUPERIOR EXPERIENCES THROUGH CUSTOMER 360
• MEETING MODERN CUSTOMER EXPECTATIONS
Today’s consumers expect a customer experience that is unique and customized. Financial services companies have the opportunity to deliver this experience by leveraging the huge amount of consumer data available from online digital interactions. Banks have found this more challenging because their organizations are often siloed and their legacy systems cannot easily capture or analyze data.
• USING DATA TO BECOME CUSTOMER-CENTRIC
For retail and commercial banks, asset managers, insurance companies, and other consumer financial institutions, a full customer view is fundamental for a successful personalization strategy. It enables them to pinpoint high-value customers and deliver high-quality experiences, helping ensure that they become loyal, lifelong customers. Additionally, with a 360-degree customer view, marketers and product leaders are able to better target consumers through data science and bring new products and services to market.
2. BUILDING A STRATEGIC APPROACH TO DATA GOVERNANCE AND REGULATORY COMPLIANCE BETTER DATA MANAGEMENT
The Data Cloud enables financial organizations to inexpensively store virtually all of their data in a single globally available, strongly governed platform and share data across numerous subsidiaries, business partners, and data partners. The Data Cloud delivers the instant scalability and concurrency needed to handle the demands of global businesses. In addition, cloud offers a portfolio of security and compliance reports and certifications, demonstrating its commitment to enforcing the highest global security standards.
3. ENABLING FRICTIONLESS DATA SHARING
Access to new and alternative data sets can be a strategic differentiator for financial institutions. Hedge funds and asset managers rely on real-time access to time series data in order to find investment opportunities. Insurance companies leverage third-party IoT data such as weather conditions and driving patterns to assess risk and provide pricing. Financial data providers can sell data about customers to companies in other industries that are looking to personalize their marketing efforts and customer experience. All of these value-generating initiatives require frictionless data sharing. However, companies with legacy systems are held back by limited data sharing options.
• ENSURING GOVERNANCE WHILE DRIVING MODERNIZATION
The payments industry has transformed based on the changing needs of consumers, providing faster, more seamless shopping and checkout experiences. Financial institutions have had to modernize their payment systems and augment their solutions to remain competitive, especially as consumers become more comfortable with conducting financial transactions with non-banking companies.
• SECURE, SEAMLESS DATA EXCHANGE
Cloud reduces the complexity, cost, and risks associated with sharing data by providing a single data repository and enabling secure sharing that does not require any preparation or copying of data.
4. STRENGTHENING BUSINESS CONTINUITY WITH A MULTI-CLOUD STRATEGY – THE EFFECTS OF DOWNTIME
Network and systems outages can occur for a number of reasons: natural or man-made catastrophes, faulty hardware or software, security flaws or cybercrime, or just plain human error. In the financial sector, where companies can handle millions of transactions per minute, the results can be costly. For banks and stock exchanges whose businesses are based on high-level data transactions, the losses could run into millions of dollars every minute. A multi-cloud strategy provides a higher level of resilience.
5. PROTECTING AGAINST FRAUD AND CYBERSECURITY RISKS – THE RISK OF BEING UNPREPARED
A modern data platform that can ingest and analyze various data types can form the front line of defense against cyberthreats and fraudsters. In-depth data analytics combined with high-volume data storage can help detect risks quickly, often in real time. But high storage costs can restrict companies to storing only a fraction of their data for a limited time, curbing their ability to defend against data breaches. With the right data infrastructure and tools, financial services companies can gain higher profitability and stronger security, and they can deliver unique, personalized customer experiences through 360-degree customer views. They can also build a strategic approach to data governance and regulatory compliance, leading to better compliance and lower costs. In addition, they can frictionlessly send and receive valuable data by breaking through data-sharing barriers, strengthen business continuity by employing a multi-cloud strategy, and better protect against fraud and cybersecurity risks.
Delving into these trends, the coming year for the financial services sector will be dominated by initiatives to leverage the power of data. Whether it’s guiding planning decisions or opening up opportunities for new products and services, ubiquitous and secure access to data will shape business activity throughout the year.
The year 2020 has been a challenging year for most businesses, not just financial institutions. Cost control and possibly a renewed focus on reduced IT spend are going to be top of mind for companies. Moving applications and processes to the cloud, sun-setting expensive legacy systems and the associated overheads that accompany them will make a compelling impact towards cost optimization and IT spending.
The financial sector is well plugged-in to digitalization. Financial institutions that can adopt deeper end-to-end transformation projects are in a better position to succeed. Those who are able to continue operations using digital platforms today are going to have a strong competitive advantage.
Time is of the essence and the sooner organizations embrace data technologies and invest in cloud-based platforms, the sooner they can unlock the potential of their data stores.
