Today, success in banking requires a growing customer base—and being able to retain existing customers. But without a way to gain insight into customer trends and historical data, growing your banking business can be difficult.
That’s why banks are increasingly turning to analytics to gain a competitive advantage. The reasons are clear. Data is growing—and technology is advancing to keep up with it. Banks are under tremendous economic pressure to succeed. And, since banks are operating in a digital sphere—and producing more and more data—it’s a natural transition to find a better way to utilize that data.
McKinsey recently shed light on the use of analytics in the banking industry to maximize business performance. In fact, analytics help banks improve retention, optimize discounting, and segment their customer base to effectively acquire new customers.
“If banks put their considerable strategic and organizational muscle into analytics, it can and should become a true business discipline.”—McKinsey & Company
Though analytics are certainly desirable, there’s still the question of how you can get the right analytics and the right insight. For many banks, this means opting for a data warehouse. Here’s why.
1. More Data, More Problems
Banks run different applications and have various systems in place. If all financial data was kept in just one system, it would be much faster to gather and analyze data. But it’s not so simple.
For starters, there’s the core banking system, which drives daily activities like deposits, withdrawals, and loans. Over the years, banks have added more technology. There’s now online banking to consider, as well as additional software for mortgages, treasuries, and investments. Many banks have even opted for financial services technology providers like Fiserv.
Trying to understand data across multiple systems can be a challenge—especially when you factor in how big and complex banking data is. The typical banking professional won’t understand the databases housing the data and the calculations necessary to extract and transform data. With data growing exponentially—and spread across systems—it’s more important now than ever to bring it together in one spot.
That's why banking professionals are using data warehouses to simplify and standardize the way they gather data—and finally get to one clear version of the truth.
2. Know Your Customer by Understanding the Data
Why do you need this data in the first place?
To succeed in today’s highly competitive landscape, you need to understand the customer—and where their future opportunities are. Data can help you zoom in on the customer—and better understand customer needs.
Successful banks utilize a 360-degree view of each customer. After all, using the right data and right analytics can make the difference between customer growth and customer depletion. In a case cited by McKinsey, banks were able to use data to create a targeted campaign that reduced customer loss by 15 percent.
The best way to gain this insight is through effective data management and analysis. For one, you need to be certain that your banking data is 100 percent accurate, so you won’t make a decision based on outdated or incorrect information. For another, you need an efficient way to process large amounts of data.
Data warehouses take care of the difficult data management—digesting large quantities of data and ensuring accuracy—and make it easier for you to focus on the analysis.
3. Measure Success—and Account for Failures
Another top reason banks need data is to understand where they are succeeding—and why they aren’t performing as well as they should in other areas.
There are trends to consider in real-time. What’s happening with customer deposits? How about loans? Is your bank meeting the reserve requirement? How is each branch performing? Where are the opportunities to improve performance?
You also need to consider trends over time—and for that, you need historical data. The problem with historical banking data is that it can be difficult to get to. It’s everywhere and in every system, but it might be archived or difficult to access for reporting—at least without a ton of heavy lifting.
Reporting on all banking data—both current and historical—requires a data warehouse. You can access and consolidate real-time and historical data across various systems and provide it to anyone who needs to report on it.
See how Fortegra uses a data warehouse to measure success. Read the customer story >
4. Bank on Data Quality
If you can’t trust your data, the data isn’t doing your bank any good.
Operational data is difficult to work with, and that certainly holds true in the banking industry. Before data can go into the hands of everyday banking professionals, there are steps it needs to go through to ensure its accuracy.
Without a data warehouse, operating data can’t go through these necessary steps. This raises the risk of human error. People might be writing reports on the wrong set of data without knowing it. Then, instead of having a valuable report packed with useful information, they’ll have a report potentially riddled with errors.
A banking data warehouse can act as the middleman between your operational data and everyday professionals. It can process the data and make sure it can be trusted—and then everyone at your organization can focus on the analysis.
Find the true cost of bad data—and find out why data quality should be important to you. Get the guide >
5. Keep Data Secure
There’s a fine line between providing useful banking data and risking the security of that data. Without a data warehouse, it’s easy to accidentally cross that line—and compromise valuable data. You don’t want to give your analysts the key to every bit of your bank’s data.
With a data warehouse, you can keep data securely locked up and still provide useful information to those who need to report on it.
Banks opt to implement a data warehouse because it creates a copy of the data. You can provide that copy to any banking professional for analysis while keeping the original dataset safe.
Learn how data warehouses keep users from seeing something they shouldn't. Read the article >
Find the Right Data Warehouse Architecture for Your Bank
More and more banks are turning to data warehouses to solve their data management and reporting problems. Should you join them? And how do you know how to find the right data warehouse for you?
One of the easiest spots to start is by considering your bank’s IT environment.
The Best Operating System for Your Data Warehouse
Which operating system do your banking applications run on? When it comes to the cost of your data warehouse, operating system can have a big impact. One of the ways to keep the costs down is to make sure you choose data warehousing software that’s compatible with every system in your environment.
The IBM i operating system can be a great spot for your data warehouse. IBM i keeps your data warehousing cost-of-ownership down. That’s because the IBM i has a database—you don’t need to buy a separate one. The IBM i is also one of the most secure and securable systems available today. That can help you save on backup and security costs for your data.
Plus, if you already have an IBM i operating system, you already have the skills to use that software. You won’t need extra training for your IT department—and you’ll be able to turn functional, accurate data over to everyday banking professionals for reporting.