The Financial Services Sector and the Power of Data

Data virtualization provides multiple other benefits to businesses in the FS sector. Operating efficiencies are bound to see a boost, as access to data becomes faster and easier.

The mantra “the customer is always right” has existed since the dawn of the retail sector, but it’s getting harder and harder to follow, as customers demand ever higher standards of service, and this has been especially apparent in the financial services (FS) sector. It used to be straightforward to provide service to a client, and a positive customer experience could easily be achieved through prompt, polite human interaction. This ensured a lifelong relationship between customers and their chosen financial institutions, one that was often generational.

The march of technology and the digitisation of the FS sector has upended this situation, and online banking and digital interactions are the new norms. With personal interactions no longer a pivotal part of the banking experience, customers are now ready and willing to look elsewhere if they feel their needs are not properly being met. In this new era, loyalty is a thing of the past. The old ties that bound customers to their banks, and vice versa, are no longer in play, and retaining customers is now as vital as acquiring them.

While many factors combine to impact a company’s retention rate, the most important one is providing a positive holistic user experience that is superior to that of the competition, and this relies on fast, high-quality data. An FS company that can efficiently process its gathered data is well-positioned to stand out from the crowd. However, with today’s enormous data volumes, that is far easier said than done.

Gathering Meaning from Data – The Next Stage

The shift towards a digital ecosystem has seen the amount of data in circulation explode. This is especially apparent in the FS sector, where every interaction and transaction is tracked, logged, and saved. Once this data is captured, it is then stored in data warehouses, data lakes, or the cloud. But this does not mean that the data is then immediately usable. In many instances, it requires dedicated effort to extract any usable information from it.

To properly parse through data and use it to improve customer experience, modern technologies are required, such as data virtualization. This is an approach to data management that integrates data from multiple disparate sources into a unified, real-time dashboard. Despite drawing this data from multiple locations across an organisation, all of the original files are left in place and unmoved from their sources. This is in contrast to traditional extract, transform and load (ETL) systems, which replicate data to a new repository, in scheduled batches.

This point of differentiation from traditional ETL systems is especially important to FS organisations. One key advantage is in matters of data sovereignty. Regulations such as the EU’s GDPR place strict oversights on the movement and replication of user data outside national borders. While systems that copy the data from the source face issues with compliance, data virtualization enables such regulations to be easily met. Views of data can be retrieved from its data source on demand, and immediately integrated with other data, with no obstacles or delays.

Data virtualization provides multiple other benefits to businesses in the FS sector. Operating efficiencies are bound to see a boost, as access to data becomes faster and easier. Similarly, the needless duplication and storage of data can be dramatically reduced. Perhaps the greatest benefit comes from the ability to seamlessly consolidate a company’s data, empowering executives to react swiftly and make decisions based on a concise overview of all available information. This is best demonstrated through the example below.

Landsbankinn – A Study in Data Efficiency

Landsbankinn is an Icelandic bank and one of the largest financial enterprises in the country. It is also an adopter of data virtualization and a first-hand witness to its benefits. Before it adopted data virtualization, Landsbankinn faced several issues with data sharing and analytics. As one of Iceland’s largest financial players, controlling 40 percent of the retail market and 33 percent of the corporate banking market, it hosted enormous volumes of data.

This information was stored at over 45 separate facilities, including data warehouses, data lakes, and a variety of other databases. As a result, finding and accessing specific pieces of information in a timely manner proved a major challenge. The lag in data collation – and the inability to apply the learnings from this data to front-end operations – meant that customer servicing and satisfaction was on the downswing. All of these factors necessitated an immediate change.

To that end, Landsbankinn shifted its operations to the Denodo Platform, a data integration and data management solution that is built on data virtualization. This streamlined and integrated its data infrastructure into a single logical data warehouse, enabling the organisation to aggregate its scattered data silos, sift through the available information, and apply it to business operations. Employees across the system were now able to rapidly access the necessary information to optimise their productivity, and business leaders were better positioned to glean insights and make strategic decisions. Most importantly, these changes enabled the organisation to better serve the needs and requirements of its customers in the most efficient manner possible.

With customer retention now the most important aspect of a company’s successful growth, organisations must prioritise an effective customer experience approach. Utilizing the enormous quantities of data gathered daily and implementing their teachings is no longer optional if a company hopes to survive in such a competitive industry. Data virtualization has proven itself as the industry’s future – it’s now up to businesses to adopt it. 

Authored By Ananth Chakravarthy, RVP Sales, Denodo India