Big Data, Analytics & Emerging Technology

Welcome to our indepth look at Big Data analytics

Banks have huge amounts of data on customers. The ability to collect, slice and dice this data has been around for years. So why has nothing intrinsically changed in the way customer details are used?

Regular readers will know that, before joining IBSi FinTech Journal in early 2016, Scott Thompson was Editor of Retail Systems, covering the retail technology sector. Retailers are increasingly savvy when it comes to squeezing every bit of relevancy from every piece of information we give to them, so Scott asked one of his contacts, Will Dymott, Head of Data & CRM at Practicology, to discuss how banks can follow their lead.

“Banks have (by the nature of the financial products they sell and regulations they are bound by) excellent information on who their customers are, what they spend money on and a joined-up view of the financial products they have bought,” he says. “However, while it could be argued that banks have better data on their customers, retailers have worked hard to turn the data they have into actionable insight allowing them to make better business decisions and increasingly automate interactions with customers, such as trigger-based marketing and loyalty scheme offers.”

Data analysis has huge potential in financial markets with possible applications including robo-advisors and improved personalisation. And progress is being made in some areas, with various FIs honing in on social networks. The credit industry is changing, utilising alternative sources in order to build loan-seekers’ financial profiles.

It is, however, a problematic area in many ways. Late last year, for example, Admiral was forced to scrap plans to use Facebook posts and set the price of its insurance after the social media giant said the scheme breached its privacy rules. Open Banking, meanwhile, is pitched as a brave new world. Yet 90% of Brits have not heard of the initiative, with 45% of 2,006 respondents to an Equifax survey saying they are not likely to use it when it becomes available.

When asked about sharing personal data in such a way, 60% would not consent to this. Concerns included security and that third-parties would be able to contact them. 43% of respondents were not aware the data they share with banks (e.g. if they have a mortgage or require a loan) can have a direct impact on the products that banks offer to them. They do, however, recognise the positives of Open Banking and would find the following tools important if they were made available through the initiative: The ability to better monitor across their bank accounts to help protect against fraud; To compare current accounts offerings from different banks; To better monitor their spending or debt and see accounts all in one place; To access lenders offering better terms for financial products.

For more on this and various other data analytics-related benefits and challenges, check out our Feature Focus. Happy reading!
Click here to access the full feature focus.

What is the IBSi FinTech Journal Feature Focus?

Each issue of our flagship monthly IBSi FinTech Journal includes a Feature Focus, dedicated to a specific area of banking technology. The Feature Foci are part of the IBSi FinTech Journal subscription.

IBSi FinTech Journal Feature Foci cover a wide range of subjects pertinent to the financial technology industry worldwide. They include detailed case studies, analysis, interviews and other feature articles.

Each publication features independently researched and compiled material, with no advertorial or contributed articles. All articles are written by IBS, and we believe that this dedication to quality is unique among publications in the banking/financial services technology space.

Click here to subscribe to IBSi FinTech Journal