Big data analytics have shaken up nearly every industrial sector, enabling businesses across the globe to gain intelligent insights and new perspectives. No where is this more true, however, than in the financial services sector. Banks, credit unions and other institutions deal with a wide range of actionable data, and when this information is analyzed, organizations can reap an array of impactful benefits.
Before banks can take advantage of perks like enhanced customer service, improved fraud detection and compliance reporting, they must ensure that they are able to avoid some of the common stumbling blocks seen with these initiatives. But what, exactly, is preventing successful use of data analytics in the financial service sector? Let's take a look:
Dipping a toe and diving in: Varying levels of adoption
When it comes to effective adoption of big data analytics initiatives, banks vary in their interest and maturity. According to a study from Capgemini, the vast majority of banks — 38 percent — are still in the exploratory phase of big data adoption. Another 25 percent are experimenting with these types of initiatives, and 12 percent are at the deployment level. Overall, only 25 percent of banks in the financial industry are expanding their use of big data, enabling them to get ahead of the competition and grow the tangible benefits seen with analytics.
While this is par for the course in many ways — every new, disruptive business process goes through similar phases — banks must devote the necessary time and energy to their big data processes in order to properly support their deployment.
Not just another project
The Financial Brand expanded upon Capgemini's findings, noting that for some banks, big data initiatives aren't as much of a priority as they should be. Some financial organizations suffer from a lack of strategic focus, treating their information analysis as "just another IT project."
"While most IT projects are driven by the twin facets of stability and scale, big data demands discovery, ability to mine existing and new data and agility," The Financial Brand stated. "Consequently, by taking a traditional IT-based approach, organizations limit the potential of big data."
This approach results in monetary losses as well — Capgemini found that returns on investment here typically only reach 55 cents on every dollar invested. When big data is a primary focus, however, companies stand to considerably benefit. The advantages of analytics can extend to every department of the business, improving processes, customer service and partner activities across the board.
Legacy infrastructure limits insights
Other issues can creep up when banking institutions don't have the advanced infrastructure and management solutions necessary to support their analytics processes. American Banker pointed out that just the management of data can consume as much as 10 percent of an organization's operating income, particularly when data and inefficient technologies are being utilized.
"The complexity that causes that cost is also unfathomable — it's 20-, 30- and 40-year-old custom-developed code, sitting on a mainframe," Simon Paris, SAP's global head of banking, told American Banker.
In order to ensure successful use of big data, institutions in the financial sector must invest in advanced solutions for the storage, management and analysis of their critical information. Without these technologies in place, banks can quickly fall behind in their analytics initiatives, reducing their competitive edge in the overall marketplace.
Thankfully, a partnership with Data Realty can help eliminate the specific issues that commonly impact organizations in the financial sector. Data Realty specializes in secure data storage, providing the space and management support banks and credit unions require. And with options like hosted and managed Hadoop hardware and data interconnection, banks will have all the support and solutions needed to make the most of their big data analytics.
As big data continues to permeate the financial sector, it's critical for banks to have the right partnerships in place. To find out more about how Data Realty can help ensure the success of your analytics initiatives, contact us today.