“We know our data is valuable, but…”
Financial institutions have more data on their customers than any other industry. The average institution has 500 million data elements per $1 billion in assets. Yet, this strategic asset is often inaccessible and underutilized due to legacy technologies and silos in your IT environment.
Most bankers know that this is a problem but are not sure where to get started to fix it. We frequently hear bankers say: “We know our data is valuable, but it’s all over the place and we can’t see it or use it effectively”. This leaves financial institutions with several data problems and no solution. Other industries are further ahead in leveraging their data while financial institutions lag behind because of their complicated relationship with legacy technology.
We want to explore the 7 main data problems community institutions face, the reason behind them, and the best way to finally see and use it. As a new year approaches, financial institutions need to take control of their data problem because solving it is no longer optional. If 2020 has shown us anything, it’s that agility and leveraging data is more important than ever before.
The 7 Data Problems
1. Data exists in independent silos
Core vendors are known to say their systems are integrated, but it’s often just at the “logo” level, meaning it’s only integrated by brand name. Likely, your financial institution stores data across many systems that detail everything you need to know about your customers. In addition to having silos from the same vendor, you can also have silos across vendors like core, trust, insurance, investments, and more. Financial institutions can have up to 20 silos of data, making it hard to see all your data work together and hinders you from creating a complete picture from your data. Bankers get frustrated by this because the information is there, they just can’t get to it.
When all these independent sources don’t connect, you can’t see what you need to know about your customers or your business. That’s why the data residing in different sources must be combined to provide users a single set of verified information. This ensures everyone has a unified view of the data.
2. Data is dirty
Any data keyed by human beings is subject to data entry errors, and core technology isn’t good at detecting or preventing these errors. It is common for users to unknowingly enter duplicate customer information in CIFs. With 40% of this manual data entry being erroneous, plus over 25% of data in the core/CIF already erroneous, it’s clear that data error is costing your institution time and money.
Think about the way you enter an address on most modern websites – all you have to do is type a few letters and a verified address appears. Your core technology may not know how to do this; therefore, it won’t know if someone has misspelled or entered the wrong data.
According to the Digital Banking Report, 60% of surveyed financial institution executives believe the quality of data used by their marketing and business intelligence teams is either unacceptable (22%) or acceptable but requires significant additional support (38%). Only 13% said the quality of their data is acceptable and 4% believed it to be excellent.
Financial marketers know they need quality data to run efficient campaigns, but they can’t always get to it. This leads to only a partial view of customers and what they really want. Community institutions are often focused on personal relationships with customers, but without the data, it gets harder and harder to deepen those relationships.
3. Data changes all the time.
Customers’ information changes as their life changes. They move, change their names, get new phone numbers, and change their email addresses. Most won’t remember to alert their financial institution of this new information, so customer data quickly and consistently loses its value. With a 3-4% rate of decay each month, your data is a moving target.
4. Lack of data access
The dated and complicated reporting tools you already have are not helping you get access. Even when core vendors create a warehouse for you, they put complex tools on top of it that still limit your access. These tools are often limited to IT staff because they are too difficult to use. This creates a complicated environment where users regularly can’t get access to the data they need. This leads to a backlog of requests for IT – and you might not get access to the information you need for months! Some bankers have already given up on requesting reports from IT because they never know if they will get the answers they need.
5. Spreadsheets don’t show you the big picture
It’s nearly impossible to maintain a consistent view across the entire financial institution if there are tons of spreadsheets managed by multiple employees who calculate and define the metrics differently. When information is downloaded into spreadsheets, it becomes more complicated than it has to be. By the time a report has been formatted on a spreadsheet and distributed, the data is already out of date by the time everyone can see it. Then different reports have different answers for the same questions! How can everyone be on the same page?
6. You can’t see the forest for the trees
You’ve probably heard the saying, “you can’t see the forest for the trees.” Because you’re in the middle of the trees, you can’t see what the whole forest looks like. When you finally get detailed reports from IT, they don’t actually help you understand the big picture because of all the detail. This again leaves you without access. If you can’t access your data, you can’t take action. Bankers can’t see the metrics that they can influence directly, so they don’t know where to start.
7. You can’t do your own analysis
Sometimes you really do need to see the trees in order to understand a business problem and answer your own questions. You need to be able to do that without resorting to those complex tools you don’t have access to anyway. Often only a few people that are trained to use complex query tools can see and use your data – where does that leave the rest of your team? Users shouldn’t have to rely on IT to do their digging for them, or start the strenuous process all over again if something isn’t included on a report.
How do I solve these data problems?
No matter how bad it seems your data dilemma may seem now, there are ways to make data understandable, visible, and actionable. You need all your data in one place, and you need access to it. You need to be able to solve your data problems. Here’s how:
Integrate your data
Data integration is like an automated factory – raw materials come into the front end and a finished product goes out the back. The finished product is understandable, usable data that the whole organization can see. A data integration process includes 3 major steps:
Automation makes fresh, clean data available each and every day. This data should be stored in a repository that contains multiple years of history, so you have the ability to track changes over time.
The 3 Cs of Data Integration
The data must be Complete – All information you have about a customer should be together in a single location that is easily accessible to everyone at any level in your institution.
The data must be Consistent – Everyone must be able to see the customer the same way. From analytical processes to retail delivery channels, the same information about the customer must be used so business decisions can be based on a single version of the truth with everyone on the same page.
The data must be Correct – You must correct erroneous data or remove it entirely so users believe in it. If they don’t trust data, they are not likely to use it.
Data can get messy fast – so it must be audited frequently by the 3 Cs of data integration that prepare the data for use.
Fully integrating your data after the 3 Cs gives you get the ability to:
- See a 360-degree view of the customer
- Make better decisions
- Create an effective strategy
- Execute efficient campaigns
Many financial institutions rely on their IT departments to pull data from multiple systems into one source, but they don’t always have the time, tools, or resources to effectively integrate their financial institution’s data. That’s why you need a partner to help you integrate your data.
Access Data
Once data is integrated, you now need to address how you will access it. This starts with the understanding that there are multiple types and needs for data access. This should be driven by your institutions business needs.
For example, if you are like most institutions, you need to know how your customers are using digital services like mobile banking. A metric like “percentage of customers with mobile banking” is a great way to measure where you are. Scorecards are a natural fit for this.
However, there’s always the need to drill-down from metrics like this to get more detail. Is the metric getting better or worse? How does that differ across markets? Dashboards are the best means to allow users to see more information without burying them in the details.
Typical detailed reports are the next level down. However, they are often the lowest common denominator – OK for many uses but good at none. These are great when you need them but shouldn’t be your first choice.
Finally, some business users need the ability to analyze specific problems. For example, a marketing analyst needs the ability to explore the data to create their own dashboards and reports.
Scorecards
A scorecard is a management system that translates your strategic objectives into a specific set of performance metrics and goals. A scorecard makes it easy to understand multiple important metrics at a glance. For example, they help you quickly understand 12 KPIs instead of 40 reports at once.
It provides timely and relevant information to measure, monitor, and manage progress. They show employees their role in affecting positive outcomes and expectations about how they can affect the measures.
Scorecards can also be used to:
- Monitor performance
- Motivate staff
- Provide accountability
- Communicate strategy
- Focus users on the most important aspects of their jobs
Scorecards are made up of key performance indicators (KPIs) that show progress toward goals. KPIs are the key metrics that help define and measure progress toward business objectives. They are metrics tied to targets that focus users on their most important tasks. There’s no purpose in measuring if users can’t change the outcome.
Dashboards
While a scorecard shows you the very highest level of that data and includes KPIs to put it in specific, bite-size pieces, a dashboard gives you the ability to see in much more detail by drilling down or drilling to specific topics. It’s not easy to comprehend all your data at once, so dashboards help you see different pieces of data by business topics. Scorecards show you where you are right now, dashboards show you the specifics. Ultimately, dashboards show a vignette of your institution’s performance. They show you what needs to be improved upon and what is working.
Data Analytics
For further analysis, users should be able to “slice and dice” data to answer their questions without having to go to IT. Data analytics gives answers to your questions. For example, if you had had a sudden drop in deposits last quarter you need the ability to quickly look at your data to figure out why, instead of waiting for IT or sifting through multiple spreadsheets.
Scorecards, dashboards and analytics benefit every department because everyone will finally be able to access and use the data. You simply can’t get a clear idea of the variety and depth of data you have in a spreadsheet.
Don’t fall behind in 2021
Taking control of your data problem takes time and commitment, but it clears the path to a more organized, communicative, and strategic financial institution. Plus, this data drives other processes in your bank like marketing, retail, commercial, and sales. Data integration is the beginning of your journey, not the end.
It’s time to solve your data problem once and for all – take control of your data by integrating and organizing it with scorecards and dashboards and enhancing it with KPIs.
Solving these problems is the first step to data recovery. Financial institutions need help –luckily you don’t have to do it all alone. Find a partner to help solve your data problem. Just don’t be one of the many that keep falling behind. Start preparing for 2021 – the need to be agile with data will only increase. 2020 has shown us staying comfortable is no longer an option because we can never predict what will happen.
Ready to take control of your data problem once and for all?
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