As a result, there is a growing need for data. Firms need to understand not only what their customers are seeking but what forces are at work in the broader economy. There are four key trends currently shaping the sector. They are:
1. The rise of a customer-centric model – Increasing numbers of organisations are coming to realise that they need to use data to better understand their customers and be able to more effectively meet their needs.
2. Increased demand for data to power analytics – Analytical tools are rapidly becoming more powerful. However, they need more data to be truly effective at delivering value to the business.
3. Digitisation and process automation – Given an additional boost by the COVID pandemic, the shift away from manual and paper-based processes to digital alternatives is gaining pace.
4. The convergence of financials and technology – Financial companies are becoming more like technology providers while technology companies are increasingly venturing into the financial sector.
Overcoming data roadblocks
One of the biggest factors limiting progress in each of these key areas is the data silos that exist within many financial firms. Databases, enterprise applications and third-party systems store data in different locations which lengthens the time it takes to achieve the insights that are required.
A better approach, being adopted by an increasing number of firms, is to combine data silos into a single, cloud-based data store. This removes usage barriers and makes obtaining a holistic view of data much more achievable. It can also allow data from multiple sources to be readily combined and used to support analytical activities.
Creating a single data platform also improves data governance. A firm can know exactly where critical data is stored, how it is being used, and how it is being protected.
Within the Australian financial services sector, this shift towards a single data store is already taking place. At the same time, finance companies are connecting and sharing their data in ways never before contemplated.
Firms are also making use of data made available by growing numbers of third-party organisations to improve their ability to gain insights and drive better customer service. Sources being used include everything from climate and epidemiological data to spending patterns and macroeconomic trends.
The rise of the data marketplace
To access these data sources, financial companies are taking advantage of emerging data catalogues or marketplaces. Rather than having to obtain copies of data and integrate it with existing systems, the firms can simply locate a suitable supplier and link directly to them.
Taking this approach means a financial firm can be confident it is always accessing the most up-to-date, third-party data available and do it in real time. This also reduces associated data integration costs, as there is no need for time and resource consuming ETL processes.
With the volume of data available to financial firms continuing to explode, having a more efficient way to locate, obtain and make use of it will become even more important. For this reason, taking advantage of a concept such as a data marketplace makes sense.
To maintain a competitive edge, and ward off growing competition from established technology companies and emerging fintechs, finance firms will need to ensure they are making much more effective use of both their own data as well as resources from other sources.
Consider how your firm could use a data marketplace to improve the way you view both your customers and the wider business world.
Peter O’Connor, vice-president of sales, Snowflake