Existing technologies – including siled data and IT infrastructure – hinder banks’ ability to improve their product innovations, and many institutions are in “catch-up mode” as they work to improve their offerings customer service.
“As we know, retail banking customers are more tech-savvy than ever,” said Cindy Maike, vice president of industry solutions at Cloudera.
“Expectations are higher and they expect their bank to provide them with a range of customer-centric services and experiences that mimic those offered by other consumer service providers such as mobile phone companies and e-commerce.”
And while neobanks like Xinja are obvious competitors in the data space, big tech companies are also making waves. Apple and Goldman Sachs have already launched the Apple Card, while Amazon and Uber are also considering moves that could make them competitors to larger banking institutions.
“Banks need to focus on data,” Ms Maike said.
“Successful data-driven banks are those that can look beyond the data that resides within their own organization and acquire external data sources that [provide] a more global and more robust vision of their customers. Alternative data has become a massive industry that can generate new customer, product and market insights, paving the way for significant competitive advantages.
However, there are several regulatory and cultural hurdles to overcome as banks become data-driven businesses. Many financial organizations are limiting their cloud-based capabilities as part of a risk-averse approach, while digital transformation and systems automation may enable entirely new types of financial crime typologies, exposing businesses to unforeseen losses or regulation.
“Innovation in the area of regulation and compliance is also extremely important,” Ms Maike said.
“This should not be seen as a one-off exercise, tick the box. Instead, regulatory changes are opportunities to not only meet requirements, but also integrate them into the business as a value-added capability. Whether it’s protecting the business or opening up previously restrictive environments, change is a good thing.
