Data-led Transformation Creates Better Banking

How leading banks are using data-led transformation to be more efficient and deliver better customer service.

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Banks are increasing their focus on efficiency as the high cost of regulatory compliance is impacting the bottom line. Data-led transformations will enable banks to become more efficient, increase the personalization and pace of customer-centric products and automate compliance. 

Banks need to reduce the cost of compliance. "We looked at tier one banks around the world and found that at least $1 billion is spent per annum by each of our clients just keeping the lights on for risk control and compliance," says Matt Hobbs, Managing Director, Customer Transformation & Revenue Growth at Accenture.

We looked at tier one banks around the world and found that at least $1 billion is spent per annum by each of our clients just keeping the lights on for risk control and compliance.

Risk control is growing as a demand on banks because fraud reduction and management is increasing in complexity, and customers expect higher standards of environmental, social, and governance (ESG). "You cannot escape the challenge that banks have to deal with and how they improve agility," says Neil Ward-Dutton, IDC VP Automation, Analytics & AI Europe. 

Tackling the three ‘I’s of banking with data-led transformation

"We've also got inflation, interest rates, and the invasion," Hobbs says of how banking is at the center of the three biggest challenges impacting businesses in 2022. "The banks are thinking about agility and the need to respond to this unprecedented change. It's about working through the right business outcomes, but also your customers and the regulators," he says. 

Beginning with the COVID-19 pandemic and now inflation, interest rates, and the invasion of Ukraine, banks are looking to optimize and make their processes more intelligent. "They are thinking about an intelligent use of data, cost efficiencies, and operational efficiencies," says Anna Bratton, Head of Financial Services at Salesforce. 

"Lloyds Banking Group uses analytics to look at their customer journeys, looking for the moments that matter within those journeys, whether that's taking out some credit, onboarding a product, and then how to drive process improvements and iterate," says Alan Davidson, RVP for Financial Services at Tableau. 

Data-led transformation driving a better customer banking experience

As Davidson points out, adding to the urgency for efficiency are new customer demands for a digital experience that has a great user experience and lowers the cost to them. For banks, this is leading to a need to focus on the customer experience. "We are seeing our customers thinking about relationship experience and how they can find a manner of engaging with the customer that creates more brand affinity but also allows the bank to take new data and insight that then allows them to create more meaningful experiences," Bratton adds. 

Hobbs says this customer focus has efficiency and compliance benefits to banks, as it will allow banks to understand that if a customer increases the number of times they check their account balance, and perhaps they miss a payment for the first time in 15 years, the bank can understand that this customer is undergoing a life event. "The response is not to get the debt agency to go and do the collection; the response is, this is a really good customer, and we need to make sure that we look at this properly, fairly, and in a compliant and regulated way. And that is good business because going down like a ton of bricks is not going to get the money back. So it is tied into the experience."  

Getting out of the data rut

Banks are struggling to be more efficient and deliver the experience customers expect as they are overwhelmed with data. "We work with a large bank who thought they knew everything that could be known about their mortgage process, but we identified a big compliance issue. We found a customer with 10 mortgages, which is fine, but each one is backed off against a property further down the line," Davidson says. The Tableau leader says banks are in one of two positions, either stuck in a data rut that has become a technology issue, so they revert to using outdated historic data and reports. Secondly, forward-looking banks want to unlock their data and the creativity of their staff.  

Data-led transformation never been more critical

"It's absolutely clear that the importance of using data and insight to drive transformation has never been more important," says Ward-Dutton of IDC of how banks are looking to data for efficiency. "We see data, intelligence and analytics really being paramount in helping them on the path to becoming customer-centric organizations," adds Anna Bratton. That data-led insight is also improving the back-end efficiency of banks. "The value is unleashed when you're thinking about data and insight taken through the whole operation, front, middle, and back," Hobbs says. The Accenture MD adds that one bank carried out a three-year efficiency transformation of its mortgage processes which delivered a payback within seven months. 

We see data, intelligence and analytics really being paramount in helping them on the path to becoming customer-centric organizations.

"There's a really great opportunity to start taking the tribal knowledge of the organization and by digitizing, build new processes and flows and then experiences that deliver back to your customers," Bratton says. To deliver this level of efficiency, Hobbs says: "Start to think about ways in which you can use data, artificial intelligence (AI), and automation to manage cases, and you can see the return very, very quickly." 

Data-led transformation driving business value

Banks that have already embraced data as a way to create efficiencies are already seeing business benefits. "Those organizations that perform in the top quartile of the IDC benchmark outperform in really significant ways; they are 2.7 times more likely to deliver significant revenue improvements, and 3.6 times more likely to improve time to market for new products and services," IDC's Ward Dutton says. "Data insights are not just about creating reports and dashboards anymore; this is about driving insight, predictions, and recommendations right into the flow of work," he says. 

"Close Brothers have launched analytical capabilities for their broker network to help them find and deliver more and high-quality business, so that's truly transformational for them," Davidson says. 

Banks are under growing pressure to be more efficient and to deliver new products and experiences to customers. Data enables banks to understand customers more effectively, which protects the customer, the relationship, and revenue. New regulatory demands require effective compliance, and with efficient data strategies, banks are satisfying new compliance demands at no extra cost. An effective data strategy will deliver insight and automation to a sector that remains a vital cornerstone of the economy. Those banks that embrace data will be able to differentiate their products and succeed in a competitive market.

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