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How Financial Services Can Seize the Big Data Opportunity

by on October 11, 2011

The financial crisis sent some clear messages to the financial services industry. Among them: Get a better handle on your data. Now, in the supposed post-Great Recession era, banks and other financial institutions are being forced to do just that. And while getting a handle on their data is a truly onerous task for banks and other financial institutions, it’s more than that—it’s also a way to uncover some tremendous business opportunities.

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To comply with new government regulations
and public pressure (think Wall Street protests) to better manage their risk, financial services firms are capturing, tracking, managing and analyzing more and better data about consumers and the markets. They’re investing in the infrastructure and analysis tools needed to truly “get a handle” on their data. Clearly, this process is only just beginning. But it’s a start.

That’s the onerous part. But here’s where the opportunities come in. First of all, being forced to take a good, hard look at how they manage data is giving some banks the opportunity for a much-needed overhaul of their data management operations and structure. Turning the spotlight on data management practices is showing some organizations that there’s lots of room for improvement, and they’re cutting costs and increasing efficiency and effectiveness to meet the challenge.

Beyond the basics, all of this focus on data, coupled with new investments in world-class data management systems, is giving banks the opportunity to redeem themselves in the eyes of consumers by improving customer service. Why not use all that data to offer customers more personalized services based on their needs and behaviors, rather than just good-old-fashioned demographics? Why not offer more favorable pricing to the most low-risk, loyal customers, making them even more loyal?

Banks and other financial institutions also have the opportunity to turn their consumer data into revenue streams. Visa, for example, has put its “Big Data” to work in forecasting consumer trends. And here’s a great example of how banks are using consumer data to partner with retailers on customer incentive programs that are helping raise both revenue and customer loyalty.

The financial services industry has always had Big Data. And it’s only getting bigger as the entire industry is being forced to get its collective data warehouse in order, so to speak. The real winners will take it a step or two further and truly put their data to work for their business and their customers.

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