Managing data is a full-time job, and most financial institutions realize this and are working to build data management strategies to future-proof their data. Which of these “game plans” will guide your approach?
Most institutions need a degree of both offensive and defensive strategies. The stiff regulations in the financial services industry typically require a slant towards defensive mechanisms, while the strong competition for clients indicates a shift towards offense.
Let’s unpack what these approaches mean, and discover whether a financial institution is more likely to find itself at one end of the spectrum or somewhere in the center.
Taking the Offense
The most assertive and effective method of managing data is based on a proactive approach to client-focused tasks, which enhance the FI’s competitive position and therefore its profitability. This requires a flexible management focus that optimizes data analytics and uses them for modeling, visualization, transformation of business practices and enrichment of activities.
Data such as marketing analytics are typically readily available across the organization in multiple formats, to empower teams to identify quickly and easily who the best customers are, how and where they interact with the institution, the number of services they have and how this has trended over time.
This enables client-facing staff to offer the best possible service at the point of contact, as well as giving support to strategic corporate initiatives and enabling the FI to respond rapidly to market changes and the actions of competitors.
A Defensive Position
It’s essential for data management in the financial services industry to include defensive options like: transaction trend analysis to protect against fraud, risk analysis and stress testing to optimize the loan portfolio. An institution’s success in the market depends on its ability to be able to deliver new, exciting products and services while managing the integrity and correlation of information contained in multiple systems.
The primary objectives of a defensive strategy are:
- ensuring data security,
- privacy and integrity of information,
- automating compliance with regulation, and
- employing governance principles.
This approach optimizes the extraction of data and tightly controls its standardization, storage and access.
The Ideal Mix
In most instances, company or environmental factors influence the data strategy you select. Financial institutions seldom occupy static positions on the offense-defense spectrum, and it’s a challenge to determine the balance needed to support the overall strategy. Achieving the ideal mix may be best left to specialist teams that can offer resources such as the technical expertise to process your data without locking you into any one vendor. This reduces the risk of losing access to systems at what could be a critical time, and ensures your data management strategy focuses on the best interests of your financial institution, rather than that of a software supplier.
Contact us for information on developing an effective data management strategy. Let us help develop a playbook that will deliver a successful game plan.