Avoiding a Digital Cardiac Arrest

Since the financial crisis of 2008 it must seem to many in the banking industry that they have been running to stand still. New scrutiny and regulation, plus rapidly changing customer behaviour, have challenged banking processes and organisational structures. These persistent trends have been accelerated by the global COVID pandemic and look unlikely to ease in the future. Against this backdrop banks have begun to digitize operations and have ambitions to be more agile and responsive, but for many digital transformation remains piecemeal or has become stuck at proof-of-concept scale. To progress, leaders, from the CEO down, must modernise the data structures that underpin operations and update their view of data itself.

Risk of Cardiac Arrest

For many data is a static asset, to be collected, stored and used to report on operations. This outdated perception is preventing progress on digital transformation now and will damage growth and resilience in the future. The new concept that will define the Bank of the Future, is ‘Data Liquidity.’ Data is the lifeblood of any organisation and must flow to every corner. Sclerotic processes, silos and un-integrated point solutions are the blocked arteries and blood clots that threaten cardiac arrest for the Bank. Fluidity of data circulation is an important indicator of overall health of an organisation and its ‘fitness’ to respond to the challenges it faces today and in the future.  

Data is only valuable if it can be used, and its value increases as it is combined with other data from across and beyond the organisation. Data gathering dust in silos is neither liquid nor valuable.  Silos are a direct result of a mindset that regards data as something ‘produced’ by operations and stored for regulatory reporting and rearward-looking analysis. From this perspective data is a cost to be minimised. Instead ‘data-liquidity’ realises data as a source of value and a proactive input to operations. To stretch the medical analogy; blood that does not circulate coagulates and suffocates the body – blood the flows freely around the body transports the oxygen and nutrients the organism needs to survive.

Insights not proof

Creating this healthy flow of data to feed all parts of the Bank demands a significant shift in mindset and attitude. Too often data-based decisions mean using a narrow sets of historic data to retroactively ‘prove’ decisions within individual teams or departments. Increasing ‘black swan’ events (like recent gas and petrol crises in the UK) demand better integration of diverse real-time data into decision-making across the organisation.

Banks have lots of data at their disposal, but it needs to be freed from silos to flow across the organisation and integrated to support decision-making and added business value. Combining, analysing and deploying insights from diverse data at speed and scale is fundamental to survival in the volatile, uncertain, complex and ambiguous environments banks now inhabit.

Creating data liquidity to meet these demands calls for analytic approaches that combine real-time data from multiple sources across the whole Bank. Only the CEO can shape the organisational changes needed to make this happen and deliver the insights needed to spot new opportunities, stimulate new thinking and drive innovation rather than reinforce established ways of working.

From Edge to Core

Traditionally, decisions are made at the core and delegated to the edge for implementation. Data generated by interactions flows back for reporting. To unblock digital transformation and to make fast, effective, data-driven decisions, CEOs must reverse this flow. Data from the front lines – the information on real customer interactions, whether online, on app or face to face in branch, must be captured in real time and fed into decision-making and strategy. Rapid, granular data can drive automated decision-making that treats every customer as an individual and improves quality of service whilst simultaneously improving cross and upsell success.

A leading U.S. bank has done this with Teradata, creating a unified Customer Data Platform (CDP) that provides a 360-degree data flow that dissolves product and channel boundaries. Breaking down internal silos allows the Bank to be more aggressive in its use of data and better at spotting opportunities for cross-selling across lines of business.

Lead from the Front

These big strategic steps must be led from the top. In previous blogs we’ve argued that the CEO must speak the language of data, become data literate. Today that is not enough. CEOs must think data and understand its fundamental connection to the digital transformation, future growth and success of their organisations. CEOs must step into this new mindset, and not only set the example for the rest of the leadership team but create KPIs that embed this shift in behaviour. Ultimately, the success of the CEO in adopting, advising and enforcing data liquidity as the critical lifeblood of the bank, will determine not only the success of digital transformation, but growth, profitability and shareholder returns.

To find out more about our thinking on data liquidity please drop us a line here or get in touch with your Teradata consultant. The next few blogs in this series will explore the implications and application of data liquidity in key areas of the bank. Stay tuned for more.