By Matthew Glickman, VP Customer Product Strategy, Financial Services, Snowflake.
Last spring the pandemic forced businesses to adjust operating models and adapt in a volatile economic market, something they’re continuing to grapple with in 2021. Changes in regulatory laws, such as the Strong Customer Authentication (SCA) rules that will come into effect in the UK in September, will also add another layer of complexity for organisations. Yet despite these challenges, consumers still expect financial services to deliver first-class, digital experiences.
Financial organisations will find that agility will make it easier for them to navigate the current climate and give them a significant edge in the months ahead. By adopting emerging technologies, such as the data cloud, they can shore up their digital functions and embrace innovative new models that will enable them to stay competitive. With this approach, these companies will be agile to customer demands and therefore one step ahead of their competitors. Here are three tangible benefits of mobilising the data cloud.
Creating a Personalised Customer Journey
The cloud offers companies the opportunity to house all their various types of data in one secure place, enabling them to personalise services for customers. By using the data cloud, companies have a consolidated governed location for all types of data (for example, clickstream, transactional, and third-party) that can ingest data from new sources such as IoT devices. This enables organisations to gain a 360-degree view of customer behaviours and preferences from multiple inputs.
A full customer view is fundamental for a successful personalisation strategy as it enables organisations to pinpoint high-value customers and ensure they have a good experience at every touchpoint. Without real-time visibility into customer interactions, providing the best possible customer experience just isn’t possible.
Over time, digital banking platforms will evolve to incorporate ML predictive models to drive even more personalised banking behaviours. This will only be achievable for organisations who successfully tap into the data cloud, as the success of ML models will require support from ever increasing volumes and access to datasets, both within and external to an organisation. The more an organisation can tap into customer personalisation, the better equipped they will be at customer retention and remaining competitive.
Sharing Data in Real-time
To ensure fintechs can continue providing the best possible customer experiences, and adapt to any demands posed by the pandemic, having an acute awareness of all data available will be key for these insights. Especially during periods of financial regulation changes, such as the impending SCA legislation we’ll soon experience. Adopting a cloud data platform that offers the direct and secure sharing of data without the complexity, cost, and risk associated with legacy data warehouses is one such solution. With simpler, enhanced data sharing, companies can quickly and easily add new data products, and get near real-time insights across the business ecosystem on how this is operating. Offering a standalone data product to data consumers can lead to substantial revenue. For example, financial companies that collect tick-by-tick stock market data can use a cloud data platform to create a data project that they can sell to hedge funds.
A cloud data platform can also reduce the manual effort and copying that is necessary with traditional data sharing tools. Instead of physically transferring data to external consumers, companies can provide read-only access to a segment of their information to any number of data consumers via SQL. By breaking through barriers between disparate data systems, companies will find new sources of revenue and opportunity.
The rise of digital-first banks, the increased availability of online services and the ongoing surge in mobile banking all represent the modern evolution of how customers now interact with their finances. To meet the demands of today’s customer, financial organisations will see big benefits in collaborating with other finservs through real-time access to data. For instance, if a customer is using a third party fintech to track their finances, a financial institution must share data with that fintech organisation so their customers can access their accounts.
Last year, 65% of banks and 76% of credit unions said partnerships with fintech companies will be an important part of their business strategies in 2020. These numbers represent an increase from 49% and 60%, respectively, in 2019, showing a clear trend towards a more open banking landscape. Financial institutions that do not take steps to improve the accessibility of its data risk frustrating their customers or losing them to a more agile and collaborative financial institution.
Data collaboration can also help improve instances where investment banks may otherwise have been forced to hold excess capital. This is because aligning on risk exposures and liquidity is executed through nightly correspondances instead of what could be real-time data sharing through the cloud.
With fully governed, secure data sharing, companies can also easily determine who sees what and ensure all business units and business partners access a single and secure copy of their data. Not only does this enhance efficiency, but centralising data into a single source of truth, rather than in separate locations, will boost data security.
The continued difficulties of the pandemic, regulatory changes and ever-increasing customer expectations present an array of challenges that finance companies must remain vigilant of. By tapping into the data cloud, companies use data to overcome these challenges by building a future-proofed technology stack that delivers business agility, competitive customer services and data sharing capabilities. Each of these aspects will offer opportunities for finance companies, giving them the best possible chance of succeeding during an economic period marked by ongoing volatility.