In the information age, a company’s data is its greatest asset.
Good data management has long delivered for financial institutions in the areas of analytics, market surveillance and risk modelling, but as emerging financial technology companies face an entirely different set of challenges when compared with their established counterparts, they require something more from their data.
In a climate of fierce competition, buoyed by an accelerating pace of innovation in the sector, delivering great customer service is crucial for digital financial services companies that want to stand apart. Adopting a robust data management strategy allows these firms to do just that.
Company data, collected from hundreds of thousands of customer interactions, can provide incredible insight into a business and customer behaviour, allowing firms to respond to changing market conditions and shifting customer attitudes quickly, and tackle their problems head-on. For retail companies, the insights derived from big data can present cross- and up-selling opportunities.
As bobsguide reported last year, retail banks are finding that advanced data and analytics has allowed them to retain customers and stay competitive with the emergence of challenger banks. It also gives them scope to personalise the customer experience, as potential clients turn away from their primary bank in favour of challenger banks with additional product services.
Getting the customer journey right is essential for your conversion rate: according to research by Fospha, financial service providers have a 90 per cent drop out rate, owing to this complex, time-consuming customer journey.
So the benefits of a great data management structure are clear, but implementing it is easier said than done. What are some of the challenges financial institutions face when it comes to data management?
At every digital company’s fingertips is a goldmine of customer data, offering virtually infinite possibilities. But often, this data exists in an unorganised state – how can businesses separate the signal from the noise? How can they derive insights that have a direct impact on company revenue? How can they determine whether there are gaps in the data, and if so, how to fill them?
When your business is collecting vast amounts of data, it’s crucial to establish a system that allows you to draw meaningful insights at the drop of a hat. The optimal data management strategy will vary widely from business to business, but all firms should be aware that it can be easy to be led astray by such a wealth of information.
To avoid reaching any false conclusions, or veering away from facing the problem at hand, it’s useful to clearly define what answers they seek from their data before adapting their data management systems.
It’s also worth bearing in mind that situations are ever-changing: market conditions fluctuate, and customer needs evolve. What is useful now may not be in 12 months’ time.
Keeping data safe
With headline-making stories of significant data breaches in recent years (and the substantial penalties attached to them) still fresh in the memory, ensuring your business adheres to the network of regulation requirements has never felt so important. According to GCHQ, more than 80 per cent of UK businesses suffered a security breach in 2014.
Compliance makes sense for both your customers and your business, as a breach can have a severe impact on your reputation, and be incredibly costly, especially in the light of the two new EU data regulations, which were each finalised last December. Let’s take a look at them in more detail.
The EU General Data Protection Regulation (GDPR), which comes into force in May 2018, updates the 1995 EU Data Protection Directive for the digital age, extends what can be defined as ‘personal data’ to location and IP address, among other factors.
It grants individuals greater control over this personal data, and applies greater penalties for mishandling data – up to 4 per cent of global revenue, or €20m, whichever is higher.
The GDPR makes data consumers more accountable, and requires that they demonstrate compliance. Under the GDPR’s guidelines, data controllers must also carry out Privacy Impact Assessments to ensure information under their control is sufficiently protected and that citizens’ privacy is maintained.
The other significant data regulation agreed last year and being enforced EU-wide is the Network and Information Security Directive (NISD), which was adopted by the European Parliament last July, and came into force last August.
The NISD obligates businesses identified as ‘operators of essential services’ – including financial services businesses – to report data breaches to the appropriate authorities. Digital service providers will also be required to take appropriate security measures and notify incidents to the competent authority.
Without a doubt, there is a lot to consider when it comes to your data strategy. Though with a dedicated data team who understands your customers and business needs, you can identify both opportunities and problem areas, optimise the customer journey, and boost customer conversion. So why wouldn’t you think about leveraging your company’s greatest asset?