Alongside people, process and technology, data is becoming a fourth pillar of the business for leading financial services firms, notes an EY study.
After conducting a confidential survey data across banking, capital markets, insurance and wealth and asset management in Americas and Europe, EY recently published a report titled: “The science of winning in financial services”.
Holistic approach is crucial
The EY report highlights that financial services companies recognize the tremendous potential value of the data they hold and are working hard to exploit that value. However, realizing and creating value from data by turning information into insight and practical action is challenging and most companies have much work ahead. As can be deduced from the following chart, just one in four companies (26%) believe they have a full grasp of the potential value of the data their organizations hold:
Emphasizing the need for a holistic approach to data as crucial for success, the EY report notes high-growth financial services firms are noticeably more aggressive in their investment in data. However, the report emphasizes that technology by itself is not enough to create a data-centric business culture.
The EY report touches upon an interview with Lorraine Waters, Deputy Chief Data Officer at HSBC who highlights that exploiting data and analytics capabilities is a long-term project.
As can be seen in the following graph, the report points out that the vast majority (85%) of financial services companies agree that exploiting the data they have will require a strong focus on people and processes, not just technology:
Unlocking value from data
The EY report points out that as the financial services companies begin to work towards unlocking the value in their data, they have to surmount specific obstacles. As highlighted in the following graph, companies expressed concerns over regulatory issues and data privacy restrictions.
By understanding the imperative to invest in data and analytics, the EY report points out that high-growth companies in particular have earmarked risk management (28%) and finance (18%) as their highest priorities while making investments in data and analytics over the past two years:
The EY report highlights that making the transition from data and analytics immaturity to a business enjoying significant competitive advantage over its rivals will require a systematic approach to improving capabilities. However, the report notes for many financial services firms, data and analytics initiatives have until now been driven by the risk and regulatory agendas rather than by the potential for growth.
The report emphasizes that now is the time to switch from defense to offense. The EY report points out that making that the switch will require greater maturity in both data and analytics. The report suggests the financial services firms should embed analytics into operational decisions on an enterprise-wide basis to exploit the potential value of the data that they hold.