Industry Spotlight | October 25, 2024
Digital banking needs the right data — not more data
Every bank wants to achieve a centralized and structured view of its customer data, as well as the powerful business benefits such a view can deliver. So what’s stopping banks from reaching this data destination? And what can they do to get themselves back on course?
The potential benefits of achieving this data view are profound. They include the ability to create and launch innovative products quickly. The ability to offer zero-time onboarding. And the potential for transforming an old-fashioned bank into a new-age digital wallet, one that “understands” the customer and offers them both long- and short-term financial products.
These benefits are not unique to banking. Yet in comparison with other industries, banking has found the goal of bringing together data from different departments of the organisation to be especially elusive. To achieve a true 360-degree view of customers, bank data needs to be not only integrated — a serious challenge in itself — but also correctly structured and properly secured.
Leading-edge banks will also gain the ability to integrate customer data from external sources. That might include data from the customer’s e-car, smart home and online shopping.
Read Industrialised data management gives UK bank confidence for data protection compliance to learn how DXC helped one financial institution achieve greater control and visibility over its data estate.
Quality over quantity
What’s holding back many banks from making more progress? One issue is their mistaken belief that more data is good data. The fact is, many banks already have an abundance of data. The question is, then, do they have the right data? And are they using that data for decision-making and, even more important, strategic and tactical action?
The evidence suggests not. In an Economist Impact survey, six in 10 executives said they’d canceled a digital project for lack of the right data.
Research by DXC has identified three primary states that are supported by data. Each stage has its own unique data requirements:
- Discover: Here, a bank seeks information and engages in new methods to help a company evolve and advance. This means looking to better understand your customers and identify new products and services that meet their needs.
- Develop: In this state, banks are making strategic decisions, and they can use data to balance risk and reward. Done right, data-driven action supports growth and drives higher revenue.
- Defend: Once innovations have been delivered to the marketplace, a bank needs to protect its resources and maintain its overall health and viability. This includes meeting compliance, legal and regulatory requirements.
The ability to use data for competitive advantage depends on a healthy data metabolism. That means getting the right flow of data and insights at the right time and speed to optimise decision-making.
Transform to evolve
For many banks, reaching their customer-data destination may require them to first take a virtual step sideways, in order to transform their core systems. A bank that fails to do this may find the path to creative evolution blocked.
Most banks will need to transform their core bank systems so that they’re able to better transact, manage risk more dynamically, conform smarter and offer efficiencies to reduce system debt and release costs. These goals may require actions that include moving some systems to the cloud, automating others, and even replacing and updating some legacy systems or be smart when sweating assets.
There’s another issue that banks need to be aware of. The same data that empowers banking customers also makes it easier for them to switch banks. Customers can move from bank to bank, jumping between different products. And because they can quickly onboard those products, once they’re done, they can simply throw them away. Clearly, a balance needs to be achieved.
Read Mutual bank recognises data significance through continued platform modernisation to see how DXC delivered a 360-degree customer view that Improved customer experience and employee accessibility.
The big picture
Banking is undergoing a massive transformation driven by technology. And the good news is that DXC Technology has decades of experience in implementing advanced systems that manage data for many industries, including banking and capital markets.
Our team of consultants and engineers have deep industry knowledge, IT services expertise and AI skills to help businesses innovate and succeed in their transformation journeys.
About the authors
Andy Haigh is the head of Banking and Capital Markets for the EMEA region at DXC Technology. He is also head of the Commercial sector for UK&I at DXC.
Mohammed 'Khal' Khalid is a global advisory director for DXC, working with customers to make real change happen.