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21st Century finance: How Big Data is transforming banking

Scott Russell, Chief Operating Officer for SAP Asia Pacific Japan | Oct. 17, 2014
The bank of the future will likely not resemble today's banks. The banks that stay in the game will be the ones that count on innovative data services and data management and respond with speed, transparency, access, and digital automation.

The banking industry is not typically a bellwether of innovation. Shackled with strict regulations, compliance restraints, security needs, and legacy systems, financial services historically have not been able to quickly adapt new technology or make sweeping operational adjustments.

However, a wave of change is coming to banking, being driven by the onslaught of mobile, tech-savvycustomers seeking a different level of services and support. The global banking industry is going through what Ashok Vaswani, CEO of Business and Retail banking at Barclays,  dubs a significant transformation of unprecedented change that will ultimately lead to "big winners-or possibly big trouble."

Vaswani notes that only two years ago, the mobile banking platform at Barclays UK had zero customers. Now it has 3.2 million customers who log in an average of 28 times monthly, giving the platform 80 million logins a month. The result? Loads of Big Data that if used wisely, can keep Barclayson the big winner side of the equation.

The Real-Time Banking Customer
The 21st century bank is not the same bank that just a few years ago kept bankers hours and waited for customers to arrive. Modern banking is a 24/7 business with customised online services, mobile apps and payment systems, and Twitter-based customer support. Its customers no longer interact at the branch or ATM but instead want to bank from theirmobile devices.  

That customer-especially those in the millennial age group--is demanding more from the bank. A Scratch survey reveals that banks were failing to serve the needs of the younger age group, and 53% didn't think their banks offered anything unique from other banks. A surprising 71% said they would rather go to a dentist than listen to what a bank has to say, and 33% believe they don't need a bank at all.

This new banking customer wants instant gratification-immediate new account or loan approval, easy ways to monitor balances, and timely methods to pay bills or a mortgage. Speed is a critical element of everything that happens in financial services. Because of that, banks arespeeding up processes on the front end and adding digital automation on the back end to cut costs and improve service.They have to be proactive, offering services before the customer can even think about it.

Big Data Shapes New Services
Banks are turning to Big Data to keep their services ahead of customer need. For instance, Commonwealth Bank of Australia (CBA) uses an automated Big Data system to capture and analyse every customer transaction, including deposits. CBA processes nine million transactions per day, handles 40% of the card transactions in Australia and maintains 12 million account profiles. If a customer makes an unusually large deposit, the automated system will trigger a workflow that suggests a relevant offer, encouraging that customer to keep her money invested at the bank.   


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