With digital disruptions imminent, these institutions need to establish a single source of truth and intelligence, says this data cloud expert.
Given the unprecedented nature of the current crisis, financial regulators, along with governments and legislatures, have faced challenges in maintaining financial stability, preserving core markets, and ensuring the flow of credit to the real economy.
IDC research predicted that spending on big data technology in banking and financial services would grow at a compound annual growth rate of 15.6% from 2019 to 2024. The ability to harness massive volumes of information to glean insights and improve decision-making is trending in three aspects: a deeper reliance on the cloud; an uptick in data collaboration; and accelerated adoption of modern data strategies and technologies.
Here are some ways which banks, brokerages, insurers, and financial technology (FinTech) startups collect, store, analyze, and share data easily and securely.
- Data in the cloud
Financial institutions hampered by legacy on-premises systems run into a number of obstacles including lack of data visibility, inability to securely access critical third-party data, and incapacity to scale quickly. By moving to the cloud with security in mind, such institutions will be able to grow their business with peace of mind.
They will have a ‘single source of truth’ for their data: structured and semi-structured financial and customer data will be centralized in one place for greater accessibility and accuracy. Data siloes will be eliminated, and information can then be instantly and securely shared across the organization and with third parties. Accelerated analyses can be achieved with unlimited scale and speed.
Isolated, elastic storage and compute resources are allocated to each workload to ensure fast performance for unlimited users. Security for sensitive and regulated data through consumer privacy compliance can be maintained with solutions that support SOC 1 type 2, SOC 2 type 2, and PCI DSS requirements.
- Data collaboration
Financial institutions are exceptionally cautious about exchanging data outside their organization. However, in order to operate in today’s world, they need to share sensitive data instantly, seamlessly, and securely more than ever.
Today, investment banks are forced to hold excess working capital because aligning on risk exposures and liquidity is executed through nightly correspondences instead of what could be real-time data sharing. Credit agencies are required to share information with banks for account and loan approval.
With cloud platforms, organizations can perform instant, easy, and secure data collaboration, and share data between parties without having to move it. This can dramatically change the fundamentals of how businesses operate, from conducting nightly loads, to gaining real-time insights to allocate funds, to meeting risk metrics, or to executing on investment opportunities.
Data collaboration can fix delays in claims processing and deliver instant customer experiences and satisfaction. With a fully governed data exchange, companies can easily determine who can see what data, and they can ensure all business units and business partners access a single and secure copy of their data. They can also monitor usage and access, control the publishing workflow, and use a multitude of built-in data security features.
- Modern data strategies
Deloitte Consulting has identified five actions that can help financial institutions unlock the true value of data assets:
- Establish a single source of truth
This integrated data availability can result in a unified view and consistent usage of enterprise data across products, businesses, and relationships, enabling amplified central intelligence. The move towards greater data democratization enables digital-first transformation and a wide spectrum of use cases across the lines of businesses and functional domains.
- Perform rapid platform consolidation
Streamlining, standardizing, and consolidating data sources through platform consolidation can improve business agility and security.
- Migrate to the cloud
Adopting a scalable and flexible architecture in the Cloud can facilitate future-proofing, robust security and business continuity; extensive analytical capabilities; regulatory and compliance; and overall business agility.
- Bolster analytics capabilities
Analytics and business intelligence help organizations gain predictive insights; interoperability; next-best-actions for customers/products/pricing/target markets; and growth actions (both organic and inorganic).
- Acquire and retain specialized talent
It is crucial to hire and retain data subject matter experts that understand line-of-business product lifecycles and processes, internal and external data, and emerging technologies.
Eliminating siloes with data
In order for financial services companies to be able to access virtually all of their data in a single, globally available platform, eliminating data silos across their on-premise and cloud infrastructure is crucial.
By eliminating such invisible walls, banks, insurance firms, asset managers, and other financial institutions will be able to securely access and share live, governed data across subsidiaries and with partners, make data-driven decisions, and meet compliance and regulatory objectives powered by real-time analytics.
When adopting cloud data intelligence, organizations should also seek future-proof features and capabilities to remain competitive in an ever-changing marketplace.