There’s a lot of talk about augmented banking using artificial intelligence and Big Data analytics these days, but what does that mean in reality or, if you prefer, virtual reality? It’s not clear yet. It is obvious that the developing focus upon Big Data and data analytics in financial services is a major and growing field. I regularly meet the person holding the Head of Data or similar title these days, and that role must somehow create an enterprise view of everything. We’ve talked about enterprise for a long time, and for a long time it has not been possible primarily due to the internal silo structures of the bank. Today, that is changing. More and more, I’m meeting banks that are creating large enterprise data warehouses in the cloud, and that’s a good thing. It’s a good thing for three reasons:
- You cannot refresh core systems unless you separate your content (the data) from your processing (the servers);
- You cannot protect yourself against a cyberattack if data is fragmented and offline; and
- You cannot serve customers well in the digital age if you do not have a single view of them.
A quick word on each.
Core system renewal is a focal point of many established banks in developed economies. Many such banks have had such systems in play for 30 years or more, and are now seeking to rip them out and renew. To do this, you have to first separate and cleanse the data stored on those aging core systems, so what better time to start an enterprise data store in the cloud?
Equally, it has been my contention for a long time that the weakest link in many banks is their multiple systems that have been developed during the past 50 years. Many of these systems exist due to mergers and acquisitions and line of business decisions, and they create separation and segregation of focus as a result. Now, with cyberattacks occurring more and more frequently – the average bank gets hit with over a million a year – the chances of cybercriminals succeeding are far greater if they can find a crack in the cyberwalls by attacking a discrete, old, batch-based line of business system than if they were attacking a complete, integrated, real-time, enterprise system.
Finally, and the real point, is that we can serve customers far better if we have all their data in one store. A single view of the customer means that we can ensure consistency of their digital access to the bank, whether that be via a mobile app, visit to a store, or a telephone call. Again, we have discussed this for years, but can you really provide an augmented digital experience if you don’t have the customer data in one place? I don’t believe so and, equally, don’t believe that a bank is fit for the digital age if it doesn’t have a single, enterprise data structure in the cloud.
Why in the cloud? Well, where else are you going to put it?
We have tried to attain the dream of a single enterprise data store in financial institutions for years and perhaps finally we are there. That’s not the end though, rather just the beginning because, once you have a single enterprise data store, the next challenge is integrating all of that external social data with the internal financial data. That’s the subject of another discussion. To start, let’s just get our internal data sorted out. Once we have done that, we can then think about how to augment our own data with other information to leverage our customer reach.
For more on why banks must replace their core systems now, read Banking Must Be Real-Time And Near-Free.