Banks playing "catch-up" on data

Legacy technology – including siloed data and IT infrastructures – is hindering the ability of banks to improve product innovations, with many institutions in “catch-up mode” as they work to improve their customer service offerings. 

“As we know, retail banking customers are more technology savvy than ever before,” said Cindy Maike, Vice President of Industry Solutions at CloudEra.

And while neobanks like Xinja are the obvious contender in the data space, large technology companies are also making waves. Apple and Goldman Sachs have already launched the Apple Card, while Amazon and Uber are also considering moves that could make them competitors to the largest banking institutions. 

“Banks need to become data driven,” Ms Maike said.

“Successful data driven banks are those who can move beyond the data that resides within their own organisation and acquire external data sources that provides a more holistic and robust view of their customers. Alternative data has become a sizable industry which can yield new customer, product and market insights resulting in the potential for significant competitive advantages.”

However, there are several regulatory and cultural obstacles to overcome as banks move toward being data driven enterprises. Many financial organisations limit their cloud-based capabilities as part of a risk-averse approach, while digital transformation and systems automation can enable entirely new types of financial crime typologies, exposing firms to unanticipated losses or regulation. 

“Innovation in the regulatory and compliance space is also extremely important,” Ms Maike said.  

“This should not be viewed as a one off, check-in the box exercise. Instead, regulatory changes are opportunities to not only meet requirements, but to integrate these into the business as a value-added capability.  Whether this is for protecting the business or opening previously restrictive environments – change is good.”