The banking industry is characterized by the need to grow customers and by the ability to retain existing customers. Growing your banking business can be difficult without access to historical and current customer data.
To gain a competitive advantage, banks are increasingly turning to analytics. The reasons are obvious. As data grows, technology advances to keep up. Banks are under enormous economic pressure to succeed. Moreover, since banks are operating in a digital sphere and producing more and more data, finding a better way to utilize that data is a natural transition. Using analytics, banks can create segmented customer bases to maximize profitability and succeed in acquiring new customers.
“If banks put their considerable strategic and organizational muscle into analytics, it can and should become a true business discipline.”-McKinsey & Company
Getting the right analytics and insights is certainly desirable, but there’s still the question of how to get the right analytics. Data warehouse services are often the solution to this problem for banks. The reason is as follows.
1. More data equals more problems
Various systems and applications are used by banks. The collection and analysis of financial data would be significantly sped up if all financial data were kept in just one system. However, it’s not that easy.
First of all, there’s the core banking system, which handles daily transactions like deposits, withdrawals, and loans. Technology has been added to banks over time. With the advent of online banking and new treasury, mortgages, and investments software, there are more options to consider. Some banks have even partnered with financial services technology providers like Fiserv.
It can be challenging to understand data across multiple systems — especially when you consider how large and complex banking data is. The average banker won’t know how to extract and transform data from the databases and the calculations involved. In the presence of data that is growing exponentially across systems, bringing it together in one place is more important than ever.
Data warehouses allow banking professionals to simplify and standardize their data gathering process — and finally, arrive at one clear version of the truth.
2. Understanding your customers through data
What is your need for this data?
The key to success in today’s highly competitive environment is to understand the customer and where future opportunities may lie. Your data can help you get a closer look at your customers and better understand their needs.
A 360-degree view is used by successful banks to make informed decisions about their customers. A business can differentiate between growth and depletion when it utilizes the right data and the right analytics. According to McKinsey, one bank was able to reduce customer loss by 15 percent by using data to develop a targeted campaign.
Effective data management and analysis is the key to gaining this insight. First of all, you need to be sure that your banking information is correct so that you will not make decisions based on inaccurate or outdated information. Additionally, you need a way to efficiently process large data sets.
As they simplify data management-digesting large quantities of data and ensure accuracy-and let you focus on analysis, data warehouses take care of the difficult work.
3. Analyze success and failure
The lack of data also makes it hard for banks to understand why they aren’t performing well in certain areas nor why they are.
Real-time trends are important to consider. Deposits from customers: what’s going on? What about loans? Does your bank meet the reserve requirement? What is the performance of each branch? How can performance be improved?
Trends over time must also be considered and for that you need historical data. Having access to historical banking data can be a challenge. Despite being all over the place and in all systems, it may be hard to access for reporting-at least without a lot of manual work.
An information warehouse is required for all reporting on banking data, both current and historical. The system allows you to consolidate and access real-time and historical data across numerous systems, enabling you to share it with anyone who needs it.
4. Make data quality a priority
A bank will not benefit from your data if you can’t trust it.
Banking is an industry that deals with operational data that isn’t always easy to work with. Ensure its accuracy by going through several steps before going into the hands of everyday banking professionals.
Performing these steps on operating data is impossible without a data warehouse. As a result, human error is more likely to occur. Despite not knowing it, people might be writing reports on the wrong data set. This means they will have a report that will be potentially riddled with errors instead of one that is packed with valuable information.
Using a bank data warehouse, you can connect your operational data with your everyday professionals. As a result, your organization will be able to make sure the data can be trusted, so that everyone may concentrate on the analysis.
5. Secure your data
Providing useful banking information is one thing, but risking the security of that data is quite another. If you don’t have a data warehouse, you’re vulnerable to accidentally compromising important information. Ideally, you would not want to give your analysts access to every piece of information on your bank.
Data warehouses allow you to store data securely while still providing useful reports to those that require them.
Data warehouses are often implemented by banks because they create a copy of the data. Any banking professional can ask for a copy of that dataset for analysis, while the original dataset remains safe.
Choosing the right architecture for your bank’s data warehouse
Data warehouses are becoming more and more popular among banks as they look for solutions to data management and reporting problems. Would you like to join them? Which data warehouse is right for you?
Consider your bank’s IT environment as a place to start.
The Best Operating System for Your Data Warehouse
Are your banking applications running on a particular operating system? The operating system can have a significant impact on the cost of your data warehouse. A good way to keep costs low is to make sure the data warehousing software you choose is compatible with every system in your environment.
As a Snowflake solution partner, we assist companies in assessing their data storage requirements and quantifying their needs. In case you have an on-premises data warehouse, our cloud and data experts provide migration services without causing downtime or data loss. Additionally, our data science team enables quick decision-making by analyzing & visualizing data to maximize the return on your investment.