Incumbent banks need to leverage data technology to improve product innovations and stay ahead of upstart challengers, according to enterprise data company Cloudera.
Legacy technology – including siloed data and IT infrastructures – is hindering the ability of banks to improve product innovations, with many institutions in “catch-up mode” as they work to improve their customer service offerings.
“As we know, retail banking customers are more technology savvy than ever before,” said Cindy Maike, vice-president of industry solutions at Cloudera.
“Expectations are higher and they are looking for their bank to deliver a range of services and customer-focused experiences that emulate those provided by other mainstream consumer service providers like mobile and e-commerce firms.”
And while neobanks like Xinja are the obvious contender in the data space, large technology companies are also making waves. Apple and Goldman Sachs have already launched the Apple Card, while Amazon and Uber are also considering moves that could make them competitors to the largest banking institutions.
“Banks need to become data driven,” Ms Maike said.
“Successful data-driven banks are those who can move beyond the data that resides within their own organisation and acquire external data sources that [provide] a more holistic and robust view of their customers. Alternative data has become a sizable industry which can yield new customer, product and market insights resulting in the potential for significant competitive advantages.”
However, there are several regulatory and cultural obstacles to overcome as banks move toward being data-driven enterprises. Many financial organisations limit their cloud-based capabilities as part of a risk-averse approach, while digital transformation and systems automation can enable entirely new types of financial crime typologies, exposing firms to unanticipated losses or regulation.
“Innovation in the regulatory and compliance space is also extremely important,” Ms Maike said.
“This should not be viewed as a one-off, check in the box exercise. Instead, regulatory changes are opportunities to not only meet requirements, but to integrate these into the business as a value-added capability. Whether this is for protecting the business or opening previously restrictive environments – change is good.”
Momentum Media is proud to unveil HR Leader, a dedicated brand for HR and the industry surrounding people leadership. ...
Having put the Twitter deal on ice back in May, Musk has now confirmed he is pulling out of the US$44 billion bid citing multiple breaches o...
CBA will be among the first financial institutions to adopt the new service. ...