Customer personalization, increased revenue streams and enhanced fraud and risk mitigations are compelling reasons for FSIs to monetize data efficiently.
Financial services institutions (FSI) are embarking on digital transformation journeys amidst a confluence of factors such as evolving consumer needs, the rise of new technologies and the need for alternative business models. As a result, Financial services industry as a whole is accelerating its migration to the cloud.
Moreover, under tough global economic conditions due to the pandemic and to highly-fragmented global regulatory standards, banks and financial services are seeing the need to implement cloud strategies to build resiliency and drive regulatory compliance.
According to IDC’s latest market presentation, State of Cloud in Financial Services Industry for Asia/Pacific excluding Japan (APEJ) for 2020, the Cloud is playing a significant role in the industry’s modernization and transformations efforts.
The research reveals that more than 40% of the FSIs in the region were already running their workloads and IT jobs in a multi-tenant public cloud. Additionally, close to 30% of banks in the study were currently running workloads in the private cloud with some companies planning to move to public cloud within the next 24 months.
IDC predicts that by 2023, FSIs’ public cloud spend in the region will reach US$13.9bn, growing at a compound annual growth rate of over 30%.
In this new landscape, what is powering everything from retail banking transactions to insurance claims to online payments? It is Data, the fuel of the financial services industry. To leverage the power of data, improve operational efficiency and generate business value for the banking industry, investments toward cloud-based technologies should be at the top of C-level priorities.
By maximizing value from real-time access to analytics data stored via a centralized cloud-based platform, here are three ways financial services companies can benefit:
- Better customer experience
Today’s consumers are looking for a unique and personalized customer experience. For some customers, personalization can be a deciding factor of whether to continue a business relationship. With access to a massive volume of consumer data, banks and financial institutions have the opportunity to deliver a personalized experience to customers.
For a personalization strategy to be successful, full visibility into customer interactions in real-time is fundamental. With the help of cloud platforms, businesses can house all types of data such as clickstream, transactional and third-party data in one secure place. Also, cloud data platforms can ingest structured and unstructured data coming from various sources including customer relationship management systems, customer transactions, and the Internet of Things. With data converging on one platform, organizations can gain a 360-degree view of customer behavior and preferences from multiple inputs.
With this capability, organizations can pinpoint high-value customers and ensure they have a good experience at every touchpoint.
- New sources of revenue
Cloud data platforms offer direct and secure sharing of data without the complexity, cost and risk associated with legacy data warehouses. With simpler, enhanced data sharing, financial institutions leverage public data sets by adding new business lines of data products and services.
For instance, offering a stand-alone data product to data consumers can open new revenue streams. Financial services companies that collect tick-by-tick stock market data are an example of this. Using cloud data platforms, these financial data vendors can create data projects that they can sell to hedge funds.
On the other hand, with insights derived from customer transactions, spending and payment patterns and product inquiries, banks can create new consumer products and services that address specific customer needs.
By breaking through barriers between disparate data systems, cloud data platforms empower companies to find new sources of revenue and expand business opportunities.
- Fraud and risk mitigation
Financial services organizations are under constant attack from cyberthreats and fraudsters. With the high costs involved, financial institutions cannot afford the risk of being unprepared. As cloud data platforms can ingest and analyze various data types, they can serve as the first line of defense against cyberattacks.
With automatic and infinite scalability, per-second compute pricing, and low storage costs, such benefits allow financial institutions to affordably store petabytes of historical data and index all of their cybersecurity, anti-fraud, and machine- and customer-generated data. With the use of advanced data analytics, banks and FSIs can then use detection rules and enhanced visualizations to pick up aberrations in transactions.
Combined with high-volume data storage, In-depth finance data analytics can help detect risks quickly, often in real-time. The result is higher data security, cost-effective investigations, and earlier detection.
A cloud data platform provides the foundation on which companies can build a technology stack that will deliver business agility and growth.
For financial services companies aiming to deliver a unique, personalized customer experience, gain higher profitability and establish stronger security measures, having the right data infrastructure and tools is a step in the right direction.