Three Trends Unlocks True Data Value in Financial Services

Snowflake Managing Director South Asia Geoff Soon says financial services require performance, flexibility, and scale to operate efficiently, and, fostering innovation in a competitive landscape, especially with the rise of digital banks, is an imperative.

By Geoff Soon

Financial regulators along with governments and legislatures face multiple challenges to maintain financial stability, preserve the well-functioning core markets, and ensure the flow of credit to the real economy.

In Singapore, the financial sector has been remarkably resilient in the face of COVID-19. According to the Monetary Authority of Singapore (MAS), 85 percent of workers in the financial industry have been able to work from home. MAS is close to 90 percent of staff working from home. The sector has been able to function, thanks to investments in digital banking and retail electronic payment systems.

A recent IDC research showed that spending on big data technology in banking and financial services is expected to grow at a compound annual growth rate of 15.6 percent from 2019 to 2024.

Financial institutions are leveraging massive volumes of information at their disposal to glean insights and improve decision-making. The following three trends have emerged to unlock the value of data in financial services: there is a a deeper reliance on the cloud, an uptick in data collaboration, and, greater adoption of modern data strategies and technologies.

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.

The cloud, on the other hand, enables financial services companies to grow their business without sacrificing security.

Benefits which organisations need to factor into their decision making is having a single source of truth for their data. Structured and semi-structured financial and customer data is centralised in one place for greater accessibility and accuracy.

Data silos are eliminated and information can instantly and securely be shared across the organisation and with third parties through data sharing.

Accelerated analysis 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 is maintained with built-in security that supports SOC 1 type 2, SOC 2 type 2, and PCI DSS requirements.

Data collaboration

Financial institutions are exceptionally cautious about exchanging data outside their organisation. However, in order to operate in today’s world, they need to share sensitive data instantly, seamlessly, and securely. Traditional financial institutions must share data with FinTech companies so their customers can access their financial accounts.

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.

Cloud platforms offer financial companies instant, easy, and secure data collaboration. Now, companies can 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. It can fix delays in claims processing and deliver instant customer experiences and satisfaction.

With a fully governed data exchange, companies can easily determine who sees 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 areas that leading financial services companies are focusing on to unlock the true value of their data assets.

Establish a single source of truth. A single source of truth 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 democratisation enables digital-first transformation and a wide spectrum of use cases across the lines of businesses and functional domains.

Perform rapid platform consolidation. Streamlining, standardising, and consolidating data sources through platform consolidation can improve business agility and security.

Migrate to the cloud. Financial institutions need a scalable and flexible architecture that is “future-proof,” offers robust security and business continuity, provides extensive analytical capabilities, facilitates regulatory and compliance, and ensures agility for launching new products and expanding relationships.

Bolster analytics capabilities. Analytics and business intelligence provide companies with a number of capabilities, including predictive insights; interoperability; next-best-actions for customers, products, pricing, and target markets; and growth actions (both organic and inorganic).

Acquire and retain specialised talent. To succeed, it is essential to hire data subject matter experts who understand line-of-business product lifecycles and processes, internal and external data, and emerging technologies that can deliver the above capabilities.

How data enables financial insights

It is imperative that organisations eliminate data silos across their on-premise and cloud infrastructure so financial services companies can access virtually all of their data in a single, globally available platform.

Banks, insurance firms, asset managers, and other financial institutions can 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.

Organisations should also look at the features and capabilities companies need to be future proof, to gain insights and remain competitive in an ever-changing marketplace.

(Ed. Featured image by Photographer Anete Lusina.)