Most financial institutions are struggling to implement data and analytics in their day-to-day operations. Fintechs have been highly successful in serving SMBs and entrepreneurs to gain customers from banks and credit unions. They can address important client needs including bookkeeping, expense tracking, insurance, invoicing, payment processing and payroll.
Most Small and Midsize Businesses (SMBs) do not find additional benefits to their business banking account over their personal accounts. So more SMBs depend on fintechs than on banks. So, several banks are investing more in data, advanced analytics and artificial intelligence to gather intelligence from the real-time transactional data they have available.
Huge Data, Missing Details
Traditional commercial banking providers as per Bahaa Abdul Hussein, do not give access to enough detail on customer behavior needed to respond quickly and with the right insights. Because banks do not have the right data foundation, they cannot easily adapt third party resources to serve their clients better. With suitable multi-speed data governance banks can create an expanded data ecosystem combining different data signals and fully leverage the scope of the available data. Banks also messages and offers.
Main Roadblocks
There are several roadblocks for banks on their journey to reach data maturity. A principal problem is that banks have their data in discrete silos. So accessing full data from all these different internal resources is time-consuming and inefficient. Usually data-driven transformation projects at banks are aimed at short term management of immediate concerns. For better results, lengthier projects with better planning are needed. Because of these issues in planning the benefits obtained from these projects are low. So the banks are fatigued from trying to reinvent themselves digitally over and over again. Most of the benefits are not from data-driven innovation to create new models of business, but small revenue generated from cost saving investments.
How Should Banks Proceed?
There are several things banks can focus on to start seeing major benefits of digital reinvention. They should work on data access, quality and cloud-based foundations to bypass their internal silos. Banks should create cross-functional teams to allow business, analytics and IT to share insights and engage in the transformation from the start. Banks can start by implementing AI for decision-making with low-risk investments and move to higher-risk investments after initial success. With growing confidence and data analytic capabilities the banks can slowly try to automate trading of other products. Using ecosystem partnership to drive transformation, AI and cloud-enabled architectures and data-driven operating models banks can increase efficiency. Then banks will gradually win back SMBs by better understanding and serving their needs.
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