High-Performing Financial Institutions Invest in Data Analytics to Outperform Their Competition

Performance Improvement


July 25, 2016

The highest performing firms have spent years making continual investments in their data analytics divisions in order to retain their competitive edge. These firms generate margin by anticipating changes in the market, streamlining organizational and operational functions, and informing decision making through data analytics.

The good news is that firms which have been slow to make investments in data analytics are not yet hopelessly behind, although this arms race has been ongoing for years. Financial services firms that grow their data analytics capability are able to generate greater margin on their normal operations in three ways:

1. Data gives the foresight to anticipate market changes

Rather than reacting to trend setters, organizations with effective data analytics set the tone in their markets by predicting and preempting market shifts. Organizations can develop offerings and products that are ideally targeted to serve and grow their customer base instead of guessing what the market wants. Less data-driven financial services organizations are behind the trend and need to invest heavily to remain relevant.

As automation takes over the financial services industry, data analytics will become the sole “coin of the realm.” Insightful analytics will be critical to boosting agility as automated services will dispense investment advice based on risk profiles generated from thousands of data points. It is critically important for firms to lay the groundwork now by incorporating data analytics into current innovation and decision-making processes, else quickly be left behind.

2. Data unearths organizational and operational improvement opportunities

In a competitive market, organizational and operational excellence position top companies ahead of their competition.

Collecting data on key business metrics allows financial service organizations to streamline operations and make intelligent decisions about how the company is run. Rather than relying on guesswork and hunches, well-positioned data and analytics enables an efficient organizational structure and operations while supporting innovation, governance, reporting, and metrics. Organizations that measure against documented ranges of process performance have the ability to both hone performance excellence and preempt expensive internal malfunctions.  Data measures applied to critical business processes can become a powerful competitive advantage.

3. Data drives informed decision making

Defining and maintaining clear strategic direction is one of the biggest challenges for financial services organizations in the coming years – doing so starts with understanding which questions to ask.

With a robust data analytics program, organizations can make decisions through identifying trends, creating hypotheses, and interrogating those hypotheses. This avoids the trap of making decisions based on outdated information, gut feelings, or – worst of all – because “that’s the way it’s always been done.”  The ultimate test of any data-centric reporting is whether the data “forces” the organization to ask the right (and sometimes tough) questions.

Widen the gap with data

Financial services firms that take advantage of the vast amounts of data available to them are leveraging a powerful asset – and one that will give them a competitive advantage in the pursuit of excellence. For example, JPMorgan Chase is using data analytics extensively to produce its JPMorgan Chase Institute reports, which report US consumer income and insights on spending patterns from the billions of transactions generated across the country.

Whether success looks like being the first to anticipate a market need, streamlining your business’s operational excesses, or steering your organization with a steady hand, smart data analytics can help you navigate the path there.

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