Survival Depends on Financial Institutions' Ability to Harness Data to Differentiate and Innovate
By Bill Greene, Ares Miliotis
Virtually no industry has been immune to the transformative changes rocking the economic landscape over the past several years. Shifts in consumer behavior, digitalization imperatives, increased regulation, heightened competition, innovative new entrants, economic uncertainty, and the Uber-ization of business models have left many companies scrambling to catch up. Financial services is no different, and leaders are finding that catching up is not enough. Achieving a competitive advantage has become paramount to survival.
In this rapidly evolving financial services marketplace, the key to sustainable longevity revolves around an organization's ability to be
Consumers: Use Data to Meet Shifting Demands
Financial services loyalty has long been trending downward, especially among younger demographics. And today's digital-first environment makes switching easier than ever before. A Capco survey found that 53% of millennials and 42% of Gen Z had
Just as the retail industry has had to evolve along with digitally savvy consumers' expectations for
The pandemic kicked consumers' penchant for digital environments and interactions into overdrive. Looking for more flexibility and convenience, they flock to providers that offer seamless experiences that allow them to conduct transactions, get help, or manage their accounts without having to visit a branch or even interact with anyone in person. It should come as no surprise then that 71% of young consumers (20-39) would
The more financial institutions can
Financial Performance: Keep Profitability Top of Mind While Managing Risk
As key economic drivers (e.g., interest rates, inflation, and overall economic performance) continue to evolve, many FSIs are struggling to stay above water when they should be discovering ways to leverage the disruption to differentiate themselves in an increasingly competitive market. This competition combined with price elasticity and increased regulatory requirements has put pressure on FSIs to price consumer products appropriately, drive revenue, and realize greater margins. The prevalence of these challenges, on top of an uptick in divestitures, mergers, and acquisitions, makes it clear that cost-cutting or price increases alone are no longer enough to combat this disruption.
To stay a step ahead of industry trends and competitors, FSIs need to keep close tabs on their key
Finance analytics get to the core drivers of profitability and performance across all dimensions of the business, including product, market, channel, and customer. It takes a forward-looking approach to drive increased margins, lower costs, and price products and services to meet strategic objectives. Risk analytics help companies identify and respond to a variety of risks, improve risk management, and meet compliance requirements. The ones that come out ahead will be those institutions that are able to use their data to maximize performance across various internal financial metrics while driving toward strategic goals and managing their own risk thresholds.
Employees: Manage Engagement and Retention
Retention begins the moment each employee starts. It's critical to make sure new hires are trained effectively and comprehensively, that all departments are fully staffed and have the right equipment to do their jobs well, and that employees feel connected to the organization and engaged in its strategic long-term vision. Organizations that manage and measure employee sustainability effectively could see benefits to their brand and shareholder value.
Keeping an eye on metrics like employee payroll, engagement, and turnover can illuminate areas of concern before they cause a mass exodus that results in lost productivity and increased recruitment costs.
Using Data to Justify Strategic Decisions
While it's important to understand how industry dynamics are shifting at a high level, it's even more critical for FSIs to zoom in on their own data to determine how these trends are impacting their own businesses.
To gain these insights, FSIs need the capability to look at historical data combined with
There is no shortage of consumer data in FSIs, flowing in from various sources constantly. The trouble is that most of it is in siloes and very little of it is accessible or actionable. Reducing duplicative systems, manual reconciliation tasks, and redundant information technology costs will allow financial institutions to be more efficient. The intentional implementation of a robust