EY - The science of winning in financial services Hero

The science of winning in financial services

Competing on analytics: unlock the power of data

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Financial services companies recognize the tremendous potential value of the data they hold and are working hard to exploit that value. Initiatives in better data management and analytics are beginning to take shape. However, realizing and creating value from data — turning information into insight and practical action — is challenging and most companies have much more work ahead.

Given this backdrop, we were keen to commission research into how this was impacting the way financial services institutions are looking at their data and analytics capabilities and whether the industry is investing in these capabilities to win in the marketplace.

Key survey findings include:

  • Data is becoming the fourth pillar of the business for leading financial services firms (in addition to people, process and technology).
  • A holistic approach to data is crucial for success; it’s not just a technology problem.
  • Leading companies are increasingly investing in data for the upside potential, rather than purely to mitigate downside risk.
  • Financial services firms are bullish about their capabilities on analytics, but many admit to needing to do much more.
  • Chief data officers are increasingly common, but are not a solution by themselves.

Five challenges for businesses:

The way ahead for financial services companies is becoming clearer as they work towards unlocking the value in their data. However, there will be some very specific obstacles to navigate as the journey continues.

Many companies are already conscious of at least some of these difficulties and are beginning to take steps to confront them. In particular, the sector is grappling with five broad challenges:

  1. Regulation and data privacy concerns still dominate.
  2. Firms need to develop a clearer vision of what they want to achieve with their data.
  3. Legacy systems make it difficult to introduce new technology solutions.
  4. Many firms are struggling with skill shortages in key areas.
  5. Unstructured data represents a particular challenge for many firms.

How companies can switch from defense to offense

Making the transition from data and analytics immaturity to a business enjoying significant competitive advantage over its rivals will require a systematic approach to improving capabilities. For now, though, too many financial services companies are still dominated by data management solutions.

They have yet to embed analytics into operational decisions on an enterprise-wide basis. And their capabilities are patchy, with no consistency of approach or maturity throughout the business.

For many financial services firms, data and analytics initiatives have until now been driven by the risk and regulatory agendas rather than by the potential for growth. Now is the time to switch from defense to offense.

Making that switch will require greater maturity in both data and analytics. Those that have already moved furthest on the former will find the latter easier — they’ll be able to depend on good quality data and to integrate internal and external data, for example.

However, analytics maturity spans a spectrum too, starting with descriptive and backward-looking analysis to techniques such as predictive analytics.