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Banks Are Sitting On The Digital Economy’s Most Valuable Resource: Data

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This article is more than 4 years old.

We just closed the page on a decade where data became the most valuable resource. In the 2010s, tech companies garnered significant attention, and much of their perceived value, from the data they obtained. As we start 2020, banks are arguably sitting on more data with greater value than any other industry. Banks handle more critical transactions for clients than any other type of company, giving them an unmatched supply of information to determine what consumers need.

But within these protective boundaries, banks aren’t doing enough to take full advantage of their data to advance the industry. The value of this data may be squandered for two main reasons:

·      Most banks are operating on outdated technology frameworks, making much of the data difficult to access.

·      Many banks operate with a corporate culture that doesn’t move fast enough to take advantage of new opportunities.

A number of industries are already much further ahead in utilizing data to deliver a better customer experience. Retailers adjust their websites for each consumer based on prior shopping experiences. Entertainment providers recommend new content – from TV shows and movies to podcasts and books – based on consumer interests and history. Data helps people find what they need more quickly.

With the right technology and personnel in place, banks can increase their capabilities by making better use of their data. For example, applying artificial intelligence and machine learning to past transactions can help financial institutions anticipate what clients expect next. In fact, personalization is even more important in a field like banking and financial services where consumers need guidance on what works best for them. They might not even be aware of a product or service that could help them save money or get the financing they need for a major purchase. It is now possible for a bank to anticipate when you’re in the market for a new home and proactively offer a low-interest mortgage program.

Banks are moving in the right direction with increased investment in information technology (IT). The rise of fintechs has provided added incentive for banks to speed up their own transformations. But these efforts have to, and can, be accelerated and extended to banks of all sizes.

As we move forward, data will be the driver behind banks’ success. Financial institutions need to put that information to work and realize that the “virtual vault” is now their most valuable asset.

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