A single source of truth (SSOT) : the aggregating of data from disparate systems within an organization to a single location whereby you have a true 360-degree view of your customers.
One of the many problems financial services companies still face today is how to design an information system so there exists a SSOT. Furthermore, if you want to get the customer experience right, YOU NEED IT! I cannot tell you how many times I have spoken with major global banks on this and they are still stuck in the legacy architecture and frame of mind where each SBU keeps their respective customer data to themselves and tells their own version of the customer’s story!
Traditional banking value chains have been disrupted by new entrants such as Alipay and PayPal. The always-connected, digitally savvy customer is turning to alternative banking providers. Financial technology providers, known as fintechs, are fueling rapid innovation. To better address the challenge of open banking, disruptive new competitors, and Big Data, leading banks pursue four strategic priorities to move to digital banking and beyond.-Approyo
Connect seamlessly – Banks must attract, cultivate, and retain customers by enabling an integrated, multichannel environment. They must analyze each customer’s behavior and point of view to succeed in the digital age. This lifestyle view determines what products are created and what services are offered when and where to meet the customer’s needs.
Operational effectiveness – Banks need to deliver customer-centric products and services using a 360-degree customer view enabled by streamlined and automated banking operations and a seamlessly integrated finance, risk, and compliance system across retail and commercial banking businesses.
Financial insight and risk control – Banks are required to keep their systems and processes up to date in real time in a complex regulatory environment. They need to meet regulatory requirements in an easy and flexible way to keep costs down.
Data-driven intelligence – Banks should be able to process applications centrally, regardless of their source, in a digital, multichannel world. They should be able to respond quickly, thanks to a high degree of automation. Decisions should be based on accurate and complete customer information provided through automated application processing and seamless customer onboarding.-Approyo
Flatten the silos!
Start changing data silos to data warehouses. Only when you have a complete data management ecosystem for your brand will you get a single version of who your customers are, how to up/cross-sell them and how your brand is also perceived by your customers. Does Net Promoter Score (NPS) ring a bell?
So where do you start?
Embrace open source. I know firsthand Infosys is a big proponent of this approach. Data lakes combine all data, structured and unstructured, into a single source for the entire bank to pull from. Keep in mind data lakes do not have the same structure as a typical DBMS, there is no restriction on the source or data type that can be collected. Just think how much social data can be brought in as well for a true complete picture. Data lakes are common for extracted data from lets say a banks on-premise CBS, CIF, or CRM where the extracted data can be stored as integrated files on Hadoop Distributed File Systems (HDFS) or Google Cloud. Building advanced analytics models that are stored in lets say Hive, will capture richer consumer insights which in turn, makes the bank more customer-centric! Now you are ready to use Tableau for visualization of your data and insights to pass back to the banks LOBs.
Below is a simplified view you have seen before in my previous blog but I incorporated a very high level SSOT approach.
Days after it was announced that banks across the world are currently in a ‘do-or-die dilemma,’ Accenture’s 2019 Global Payments Survey reveals that 60 percent of the participants believe they will lose up to 15 percent of payments revenue – $88 billion – in the next three years after being displaced by emerging, competing financial services players.
38 percent of respondents said that big technology companies pose a competitive threat and 32 percent of those surveyed feel the same about fintech firms, which makes sense with the latter attracting nearly $11 billion through over 800 deals between 2016 and 2018.–Forbes
What are the benefits? Just ask CISCO and Gartner!
Improved customer acquisition and retention: The average company loses 10-15% of its customer base every year (Bain & Company). Understanding your customers needs coupled with timely offers on your customer’s terms will likely keep them around for a while. Going from a bank-centric to customer-centric approach.
Quicker GTM strategies and profitable growth: You can launch and test new products in a more agile approach when armed with true data.
Improved customer experience: Access to customer data where you get the full picture leads to a better customer experience with live call centers or software-based applications like Zendesk.
New products and enhanced services: Let the data show you where to dial-up or dial down your efforts to support other customer-interaction channels, including social media, mobile banking, and branches.
Better internal LOB collaboration: As data is being pulled and analyzed, opportunities will exist for the sharing of insights and best practices.
Given the shift in how organizations are working, consistent and reliable flow of data across people, teams and business functions is crucial to survival.”– Gartner, 2020
Improved Risk Management: Inability to monitor and control risks due to the various businesses having independent systems will keep banks exposed and regulators breathing down your neck. Citi was just fined today $400M from the OCC and ordered the bank to improve its risk-management practices.
Fintechs have challenged the status quo of banks by using an always-on, innovative customer-centric approach. They have done a great job removing friction in typical banking functions as well as enjoy social media channels for customer acquisition. Banks need to take a long hard look at their legacy technology infrastructure and how they plan on keeping their existing customers happy.