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The financial services industry is at the forefront of digital innovation leveraging disruptive technologies. Banks and credit unions are actively applying technological advances to stay germane and deliver digital banking services for their customers. This increasing adoption of technology is making the rise of data volumes that can enable personalized experiences if used appropriately. The financial industry accesses a wide variety of information or data points surrounding their clients and utilizes it to augment productivity and profitability. These data points include spending patterns and behavior, social media, credit history, product portfolio, channel usage, etc.

Today, most banks and credit unions are still running on legacy business processes instead of experimenting with new digital initiatives. This significantly restricts new opportunities to drive the change within the firm. Embracing the right tools and strategy and leveraging all of the data points mentioned above can help financial institutions make informed decisions and offerings at the most convenient times for their customers.

Whether banks and credit unions decide to perform their data analytics in-house or through third-party professional firms, they must know about what data they have. They also must consider the accuracy of data and establish rigorous data governance.

 

Data Trends Defining the Success of Banking and Credit Union Industry

Data Analytics for a Customer-Centric Strategy

The Data-first approach in the financial industry is vital to deliver customer-centric services. With the emergence of digital banking and big data, the customer-centric approach today goes hand-in-hand. According to an IBM study, 71 percent of banking and financial markets firms believe that the use of information, including big data and analytics creates a competitive edge for their organizations. Moreover, 55 percent of all the active big data efforts have identified customer-centric objectives as their top priority. Integrating advanced data analytics tools will assess customer information and derive actionable insight, such as customer segments.

Use of AI and Automation

Applying automation and AI technology into banking processes can foster productivity by eliminating tedious, repetitive and menial tasks, enabling employees to focus on more valuable tasks. Such technologies reduce the risk of human error from transactions and ensure consistent outcomes. A McKinsey report revealed that banks and credit unions that embraced AI to automate processes and residual operations are witnessing an improvement of over 50 percent in productivity and customer service against those that don’t. AI and automation technology also save time and money for companies.

Rise of Data Governance

Rapidly changing regulations and demand for data security are increasingly creating growing challenges for banks and credit unions. To remain vigilant and keep up with this changing environment, firms must ensure their data is of high quality, accessible and secured. Additionally, they should determine how they can make better use of the data they collect. To establish effective data governance, institutions must prioritize people and organizational structure, data governance processes and data governance technology. With a growing number of data practices, compliance challenges and economic uncertainties, they should make data governance a priority.