3 Factors Why 2017 will be a Milestone Year for Data
Changes in attitudes towards data means 2017 will be a milestone year in how we drive value from information assets. In this blog I’ll be exploring 3 of the factors that lead me to this conclusion.
This all started as I was preparing for a recent speaking engagement when I was asked for my top predictions for 2017. Predicting likely changes in the Financial Services market is difficult given the industry’s caution to anything new with an unclear risk profile. The more I thought about it, the more I came to the conclusion there are a number of factors that, when taken together, means I think 2017 will be the milestone year when we see the understanding of the true value of data become much more institutionally significant.
Reason 1: Great data underpins the initiatives to address industry macro drivers
The Financial Services industry is busy coping with a number of macro factors, all of which drive change. I’ve picked out 5 macro factors I frequently hear Financial Services organisations describe as some of the main business challenges they face and I think addressing these will rise to the top of every business agenda in the milestone years of 2017.
All of these macro factors become easier to address with great data.
These macro factors are:
- Regulation & Compliance
- Whether it be Banking regulation (e.g. BCBS239), Insurance regulation (SOLVENCY II) or data privacy regulation (GDPR) – all require strong data management and governance capabilities that are adopted across the organisation. Therefore, the need to demonstrate compliance requires a very strong data foundation
- Growing the Business
- Finding ways of using data to better understand customers, their needs and markets sits as the core of many organisations plans for increasing wallet share per customer/client as well as cross-sell and up-sell activities
- Improving Operational Efficiency
- Utilising data automation techniques reduces time and cost by removing manual data manipulation whilst providing the business the confidence they need around the data through documented and repeatable data processing techniques
- Disruptive Technology
- With a range of disruptive technologies now becoming available, many Financial Services organisations are looking at how to best utilise the data provided by them and to work out how to drive value from that data. Disruption is either positive (e.g. more data) or negative (e.g. more threats)
- Mergers & Acquisitions (M&A)
- As M&A is still a valid growth approach, Financial Services organisations are now looking not just at organisational fit but how well the respective businesses data repositories could fit together. If businesses can’t effectively create a single view of key business data cross the new organisation, the likelihood is that the value of the merger or acquisition will either be reduced or delayed
Reason 2: It’s all just data
With so many different terms being used to describe different attributes of data, many Financial Services organisations are now adopting an ‘it’s all just data’ approach.
What this means is that rather than thinking of each type of data as a separate domain, they’re thinking about a holistic data domain that has an extended set of attributes.
These extended attributes enable organisations to look at all types of data and then determine the optimal way of driving value from the data, rather than focussing on how to manage a specific type of data. This shift in thinking provides Financial Services organisations with an holistic data platform to utilise and combine multiple extended attribute types, all with the focus on how to drive value from that data.
The diagram below shows some examples of these extended attribute types, many of which are already common terms in our industry. The notion of how to drive value from data across any, or all, of these is a much more valuable approach
Reason 3: Organisations are already gaining value from data
Some Financial Services organisations have been brave and started exploring ways of better utilising data to drive value. Whilst organisations may define value differently, one common factor is that they’re better utilising data and finding it makes a material difference to the outcomes of their business agenda.
Below are some examples of the value Financial Services organisations are gaining from improving the creation and utilisation of great data:
- One Insurance company reduced their IT costs by millions of dollars over 4 years through modernising platforms and migrating enormous amount of critical data
- Another Insurance company expected a drop of 1% in customer attrition and expected to increase revenue by 1% by gathering, reconciling, consolidating and cleansing business data
- One Bank integrated data from multiple systems to an AML solution and found they could source new data 50% more quickly
- One Bank saved millions of dollars through acquisition real estate savings plus increased customer collections by millions of dollars
All of these examples show that Financial Services organisations are already achieving tangible business value from the use of great data.
So 2017 will be a milestone year
So there you have my 3 reasons why I think 2017 will be a milestone year for data in Financial Services. There are still many challenges in the space but I think there are more opportunities.
Financial Services has always been about managing the money and risks of our customers and where both disciplines are data related. Data has always played such a really important role in our industry and now is the time to grab the next set of opportunities which will be, and are being, tackled with great data.