Two Ways Master Data Breeds Success in Financial Services

Their business may be finance, but these days banks don’t earn—or keep—customers by providing better returns or interest rates. Instead, banks increasingly compete by giving customers modern conveniences while making sure they stay in compliance amidst regulatory complexity.

Those two issues—customer experience and regulatory compliance—are at the heart of the banking business in 2017. And to get ahead at either one, companies must focus on the management of their business-critical data using MDM.

Keeping up with customer expectations

Today’s consumers are assertive patrons. Even mildly disappointing experiences can inspire a change in loyalty. While this trend may have taken root in other industries, such as retail, banks are not immune. Today’s banking customers have wish lists, and companies that don’t offer the innovative experiences customers want, will lose their business. Meanwhile, credit unions, community banks, and so-called challenger banks are upping their game and competing for a bigger share of the customer base.

What do banking customers want? The list below gives a glimpse into today’s most in-demand banking services, but you can expect the list to change dynamically:

  • Mobile banking—Brick and mortar is the bank service of last resort. The typical bank customer wants to do all their banking from a mobile device—and never, ever have to visit a branch location.
  • New payment mechanisms and currencies—Payment technology is evolving rapidly. Many customers are looking for banks that will support, not just Bitcoin, but the underlying Blockchain technology that can enable any type of cryptographic currency.
  • New ways to transfer funds—SMS payments are in high demand. So are private, peer-to-peer money transfers, in which customers use specialized apps and social media to send money to their friends, make donations, or pay their rent.

Whether it’s paying via Snapchat or photographic check deposits, banks need MDM to help them understand what services their customers want most.

Lowering the cost of staying in compliance

The typical financial institution has 50+ regulations to adhere to every year. And they can expect changes and additions at any moment. The cost of non-compliance—in terms of both fines and loss of reputation—is too expensive to consider, so compliance is a must-do. A grisly, complex and resource-intensive must-do. In a 2016 article, Bain & Co. estimated the total cost for GRC (governance, risk, and compliance) is 15 percent to 20 percent of total operating costs.

A great deal of compliance resources are expended on reporting. Banks typically must create reports for auditors showing all its customers within a region, all the transactions performed within a time range or all the money transfers conducted over a dollar amount. The details will vary, but reporting is always a huge burden for banks because investigators may need to pull data from many different systems in order to meet the reporting requirements.

Using MDM technology can help banks consolidate accurate information across multiple banking systems. This means reporting data can be pulled much more rapidly and efficiently—and in many cases can be automated to meet recurring compliance obligations.

Federal mortgage lender Freddie Mac uses Informatica MDM as part of a system to improve the efficiency of its data governance professionals. During a presentation at the recent MDM 360 Summit, Lori Smith, Director, Single Family Data Governance and Management for Freddie Mac, shared a few details of this strategy:

We use Master Data Management to create a golden record that we use in analytics systems, Salesforce, and elsewhere. We empower people, making business users more successful and faster on their job with data governance. This has changed the way we view data in just a few months.

With regulatory burdens unlikely to go down anytime soon (if ever), an investment in MDM can help banks drastically reduce operating costs while staying in compliance.

Preparation for the data-led future

Finance industry leaders have a few excellent upcoming opportunities to learn more about how MDM can help with these present and future business challenges. First, please join me March 30th for a webinar, “Compete on Customer Experience with Our Next-Gen MDM Customer 360 Solution.” Together with my colleagues, Monica Mullen and Oliver Soans, I will talk about why master data is must-have for creating customer experiences that drive loyalty and satisfaction.

To learn more about data management in the compliance arena, a webinar March 29th will highlight the game-changing capabilities of Informatica’s Enterprise Data Governance solution. Find out how organizations under high regulatory burden can turn the tables on resource-devouring GRC processes.

Finally, as banks develop a more modern service portfolio, it’s important also to have a data-led strategy to market those services to the right customers. In my next blog post, I’ll talk about the advantage MDM delivers in this additional business-led initiative.