Analytics tools that mine through data has become essential as banks look to give customers personalized, relevant communications and offers. But simply buying technology solutions isn’t enough; banks need to have the right people and processes in place and know what they want the data to do for them, some experts say.
“Banks of all sizes will need to use predictive analytics going forward,” said Paul Schaus, president and chief executive of the consulting firm CCG Catalyst. “But there’s so much data they have access to, though, so they first need to define what data they are looking for and why. Without a clear data strategy, you can get overwhelmed by the sheer amount of it. It’s like trying to take a sip of water from a fire hose.”
What’s clear is that banks are investing in analytics to enhance customer experience. According to a recent Capgemini report, while banks have traditionally invested in analytics solely for regulatory reporting, nearly a quarter of analytics initiatives were earmarked for customer experience initiatives in 2015. Additionally, chief information officers said data analytics trailed only security in where they expected to see increased spending this year, according to a 2015 report by SourceMedia Research.
This means banks need to have a definite plan for what they want the data to do for them, such as trying to assist growth in a particular market or sell more of a particular financial product. Further, Schaus said, banks will need to employ more data scientists to help them use data more effectively.
Most large banks are already doing this, but it is something smaller banks will need to do, too. For banks that don’t have the budget for full-time data scientists, employing consultants or short-term analysts on a per-project basis will be necessary, Schaus said.
The good news is that finding data scientists is becoming easier. Data science is an increasing focus of colleges and university course offerings, said Ambreesh Khanna, group vice president and general manager of Oracle Financial Services’ Analytical Applications group.
“All universities are offering courses in data science now,” he said.