Alongside driving profitability, the CIOs of some banks and other financial institutions that I talk to are now keen to find ways to ‘power good’ for society, writes Paul Lewis, Global CTO at Hitachi Vantara. Thankfully these don’t have to be contradictory goals. In fact, they can go neatly hand in hand because they have the same root: data transformation.
Effecting good in data takes an innovative data strategy that lets you store, secure and contextualize data so it can drive new insight, power AI algorithms and orchestrate Machine Learning.
In this second of a new four-part blog series, I’ll explore how already digitized banks and other financial services institutions are perfectly placed to now take the next exciting move on their transformation journey. That means putting in place a mature data strategy which can monetize data to drive profitability while also helping to achieve practical and positive things for their wider communities.
I hope you find the thoughts here insightful on your journey to building a better business, in every way.
We are living in an age of data overload. Data lakes are becoming data swamps. Data protection and governance are increasingly prohibitive in their complexity. Too much data is stored in siloed systems and the cost of caretaking and managing it all has long been spiralling out of control.
This all makes it increasingly hard for banks and financial services institutions to locate the data they need in a timely way to drive business and social advantage. How do they make sense of it all and protect themselves against complexity and cost while also focusing on creating new services that can power social good ?
I’ve identified four elements that any CIO keen for their organization to pursue the greater good alongside profits now urgently needs to think about:
1. Understand why data is the right focus rather than infrastructure and applications: how can you make data less rigid and hierarchical, more interactive and agile?
2. Adopt a mature strategy for monetizing data to secure business success, shorten the coming recession and do practical and positive things for communities.
3. Ride the innovation wave — don’t reinvent the wheel finding the right partners who are expert in the tech they need, offering ready-made, proven blueprints.
4. Grow banking eco-systems diversely yet holistically mirroring how people live in the emerging world and both guiding and embracing other sectors to drive social good.
This blog focuses on the second element: Adopt a mature strategy for monetizing data.
What’s needed is LESS I.T.
There’s always a temptation for financial institutions to add ever more resources to their data center infrastructure to support short-term operational goals or increase capacity for specific applications, datasets or socially motivated projects. But that can increase the rigidity and hierarchical nature of data structures instead of creating the kind of interactive, agile, insight-rich data environment they really need.
A much more progressive way forward is to embark on a fundamental restructure: a new approach to data that will both support strategic transformation initiatives and improve data accessibility and analytics opportunities. That way, banks put themselves in pole position to compete with more data driven, agile, digital-first banking competitors like Monzo — as well as opening up new opportunities to design services that can power positive social change.
The question is how can you turn data into an agile asset, ensuring that it’s available in the right place, at the right time? I believe it requires a powerfully thorough and methodical four-stage process, with all the elements working together as one honed data strategy:
- Store – Ensure all data is stored and managed correctly to optimize accessibility, archiving, security, backup and privacy: across its lifecycle.
- Enrich – Create context around transactions to deliver a rich 360° view of datasets.
- Activate – Orchestrate connections between data sources to further enrich data and drive AI and Machine Learning.
- Monetize – Use these connections to create innovative value-added offers and new services that give customers what they want, in the way they want it.
This puts banks in a position to positively impact people’s lives
Once a bank has a smart, agile data strategy like this in place, new opportunities open up to monetize that data and also make banking services increasingly diverse, meaningful and valuable in customers lives. There could even be ways to potentially help ease the impact of the recession that’s almost certainly coming up.
Here are a just few practical ways that I believe the banking sector can now harness this kind of agile data strategy to power good for customers and wider societies.
- Turn bank branches into much needed diverse Community Hubs — Securely dispensing vital new health and well-being services such as telemedicine.
- Create new marketplaces to serve under-banked or non-banked populations — Allowing customers to buy things online using a bank account that doesn’t require a complex credit check that many would fail.
- Build new applications that help account holders improve their personal financial management — These could be based on a relatively simple analysis of their monthly costs and the potential savings that they could make.
Keep going on a low-risk DX path
One critical take out here is around risk; always an important consideration in the banking world. The sector is already ahead of the game in terms of digital transformation, meaning it is likely to be less impacted than other sectors by the coming recession. It’s a testament to the wisdom of investing in new digital models that the sector has been so brilliantly prepared and able to weather the Covid-19 crisis with relatively low impact.
However resting on their laurels now is a dangerous strategy. It would be very easy for banks and other financial services organizations to fall behind competitors in this dynamic sector that is so attractive to new, digital-first contenders. Instead, they would do well to seize this moment to consider how they can keep building on the technology advantage that they have gained to further transform data and strengthen their business while also powering the greater good. By focusing on data in the right way, our financial institutions can continue to help their customers stay as safe and secure as possible as we move into the likely future recession.
It’s worth noting that at Hitachi Vantara, we’re not just talking about what is possible with data: vision-painting if you will. We are solving problems for all kinds of financial institutions right now with a range of mature data solutions using the strategy I have already outlined that we call SEAM: Store, enrich, activate, monetize.
In the next blog in this series, I’ll look in more depth at how finding the right partners who are expert in the right range of technology needed can also give CIOs in this sector a huge head start.