Financial organizations have more data than ever before available at their fingertips. However, companies are still figuring out how best to analyze and capitalize on it.
According to a report cited by Financial Executives International, just 14 percent of finance orgs report being currently successful at turning their large stores of data into valuable business insights. This means there’s a long way to go in this sector in terms of making the most of the benefits financial analytics has to offer.
This challenge can boil down to a number of factors: outdated legacy analytics tech, stakeholders reluctant to invest in a new strategy, low adoption rates of tools among users, lack of overarching analytics strategy, a company culture that barely drives data usage or fails to do so altogether — the list goes on.
Why is it worth overcoming these hurdles to capitalize on financial analytics? Here’s more on what organizations stand to gain if they do — and what they stand to lose if they do not.
Table of Contents
Staying Ahead of Changing Customer Expectations
The way customers regard financial services companies and banks is quickly changing — likely fueled by changes in the retail sector catering toward convenience, speed, personalization and rewards for loyalty.
Whether people are shopping online for new shoes or applying for a loan through a bank, they want a quick, straightforward experience customized to their needs and offering as much bang for the buck as possible. They want to feel brands understand and reward them for continued business.
This means financial organizations absolutely need to acknowledge customers’ wants, needs, motivations and behaviors on a deep level so they can provide relevant products/services.
Scotiabank is harnessing financial analytics from ThoughtSpot to give banking teams access to trends across billions of data points pertaining to online transactions, interactions by branch and customer churn. Armed with these insights, employees can take targeted action to address problems and fuel desired business outcomes.
Identifying Opportunities to Increase Revenue
The financial services sector is notoriously competitive, which means companies need every advantage to maximize their margins and market share. Another use case for financial analytics is identifying when, where and how to best cross- and up-sell so firms don’t leave any money on the table. Analytics can also help companies critically compare the performance of different locations, product offerings and channels to understand how to reach customers most efficiently and effectively.
Artificial intelligence-powered data analytics software in particular is changing the game for financial organizations, as these tools use powerful algorithms to automate data mining — or searching huge troves of data for potentially useful patterns and occurrences, then bringing them to the attention of employees so they can act as needed.
Reducing Operating Costs
As one expert notes for Finextra, high levels of competition and tight profit margins are leading to increasing pressure on financial organizations to streamline operational costs and boost efficiency. Data analytics can help identify sources of wastage and inefficiency, as well as potential solutions, to help companies meet or exceed their operational budget goals.
How financial organizations implement data analytics is increasingly making or breaking their performance in areas like marketing, customer service, product design, product sales and operations. There’s an ever-increasing amount of data coming in every single day, but many financial services firms still need to prioritize the strategy and tools necessary to analyze it for the benefit of their bottom lines. While embracing analytics can help an org gain a major competitive edge, falling behind in analytics can do just the opposite.
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