Data-Driven Organizations Will Lead The Digital Revolution
Part 1 of 3: The Opportunity of Big Data
A couple of weeks ago, I received a timely “Happy Birthday” email from one of my current banking institutions, sent by a financial advisor located in New York (about 3,000 miles from my home). My bank has not recognized my new address in their system yet to provide me with a new financial advisor that is close to my home after I relocated 2 years ago. As a loyal customer of many years for personal banking, mortgage, and financial services with this well-known global bank, I know I have better choices today. As I select a new bank now, I’m driven by how modern their online services are and whether they have a mobile application that works with my device of choice (a Windows phone) and with which I can deposit checks and make payments to anyone with convenience. The brand of the bank has lost importance.
Research shows that I am not alone in my desire to be better known and treated, and in large part because of this, financial institutions are facing unprecedented pressure for change. More than ever, customers expect better connected experiences that are personalized and simplified. In addition, fierce competition is slowing growth and eroding margins. Banks need to redefine the future of the branch, introduce innovative products that improve margins and deliver personal, connected experiences while proactively managing risk and addressing regulatory compliance.
Financial institutions also have the opportunity to tap into their vast historic and transactional data assets from multiple lines of business and combine them with new external sources such as social media to gain deep insight about their customers, their business, their risks, and their regulatory compliance. Insight can help redefine business strategy, create new business models, improve decision-making, and ultimately improve relationships with their customers.
In 2013, IDC surveyed 2000+ organizations, about their expectations for big data analytics. The results were startling. First, they determined that across businesses worldwide, those that embraced big data and predictive analytics would reap approximately a $1.6 trillion increase in earnings over those businesses that do not (IDC Data Dividend and Survey [n=2,200], April 2014). At the worldwide level, leaders will capture $1.6 trillion more in value from their data and analytics investments over the next four years. This represents a 60% higher data dividend for leaders.
Clearly, big data is a key strategic asset when the business value is captured. I wonder if my bank knows that they are about to lose my business. After all, they must have complete information about my financial habits after some twenty years of my doing exclusive business with them.
Transformation towards a data-driven culture is an imperative for financial institutions to remain relevant in the digital age. Those that grow their skills to leverage their data assets will be able to better understand their customers and improve their operational effectiveness. For these institutions, data will be a virtually limitless resource for continual transformation, empowering them to lead and thrive in the decades to come.
Microsoft Services has been helping organizations in their technology transformation journeys for many years to incrementally innovate and become more profitable. In the digital age, we tailor our engagements to define a clear transformation strategy and roadmap deliver impactful business outcomes and leverages best-in-class technologies that accelerate time to value. In Part 2 of this blog, I will be focusing on the challenges that come with obtaining timely and actionable insights from big data, and how Microsoft Services can help financial institutions deal with those challenges, harness new business models, and open up new opportunities for growth.
