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Know Thy Customer

There has been much discussion, particularly in the UK, about banks restricting the use of their investment and retail arms. The thinking process behind this is that investment banking is much riskier and so by drawing a clear line between the two, consumers will be better protected if another financial crisis should hit.

This would be a massive undertaking – not just from a management perspective – but also from a data point of view. Banks hold reams of data and one of the key problems they faced in the midst of the last financial crisis is that they lacked transparency into information because it was poorly integrated, duplicated across various departments and was not always accurate. Improvements have certainly been made over the last two years, but there are still many hurdles to overcome.

I’ve experienced this first hand. On a recent trip to the bank it became apparent that it had never integrated or reconciled the data they held on me. There were a number of different personal addresses on file, including a university term time address! Personal information such as my wages, work address, contact numbers were all multiple and incorrect.

It is clear that banks still have a long way to go to get basic account information correct, and this really does need to be correct for any bank to even think about the next step in terms of structure. In an ideal world banks would have a complete, single view of every customer on their books. They would know how much we have saved and what our mortgage, loans and credit cards amount to, all in one place. The truth is, however, that as most banks are the products of mergers and acquisitions and consist of many separate divisions, information is fragmented and the need for a single customer view has been overlooked in most cases. Data on each individual customer’s savings, investments and borrowings can sit across several different computer systems that don’t talk to one another.

It is this siloed approach to data that also represents the biggest sticking point when it comes to the reforms that the UK Government is proposing. Banks need the technologies and methodologies in place to be able to access data from all parts of the enterprise and guarantee its integrity. Without data integration blind spots will still exist – and if you don’t know about the risk, how can you manage it?

 

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