The financial services (FS) sector has not escaped the unprecedented challenge posed by the pandemic. COVID-19 has, however, sparked a ‘tech awakening’, with swathes of businesses in the sector embracing cloud-based services at pace to help bolster remote working and maintain high standards of customer experience, writes Duncan Ash.
Global consultancy McKinsey had forecast that between 40-90% of banks’ global workloads could move to the cloud in a decade. Bankers now believe COVID-19 will accelerate that shift even more dramatically – with big data powering the transition.
You could, therefore, be forgiven for thinking that CEOs and senior leaders in the financial services sector already see themselves as an example of how best to use data to make decisions. According to recent research, however, they are instead concerned that they don’t have access to enough data compared to their peers in other industries.
A reliance on gut feel
During the last few months, customers have naturally turned to their banks for crucial advice. But when asked what informed such advice and decision making, however, a staggering 45% of financial service leaders said ‘gut feel’.
At a time filled with so much uncertainty, when even the simplest decisions could have significant long-term implications, the pressure this passes on to individuals to make the right calls is far from ideal. With the increasing shift to digital services, banks should have even more data to hand to inform decision-making, so what is going wrong?
The need for speed
When it comes to providing the advice to help individuals and businesses recover from COVID-19 effectively, FS leaders need data and they need it quickly. In this industry, 84% of decisions need to be made on the same business day and often in under 15 minutes, which is faster than any other sector.
When we examined the disconnect between making critical decisions and using data to make these more accurately in our research – speed was the most important factor for not using data. The biggest culprit for not asking for more data when making a business decision was the need to move quickly. More often than not, leaders did not feel they had enough time to glean any additional insights.
As the financial sector becomes increasingly digital, this must be addressed. Institutions need to prioritise the organisation of their data to ensure that it is not only secure – but also easily accessible so employees don’t hesitate to consult it. For employees in the sector, hopefully, this will mean fewer decisions made on gut feel and more based on insightful data that they can access instantaneously.
Being ‘open’ about data
Moving beyond speed, other reasons have also been blamed for the lack of data-led decision-making. Over a third (40%) said they didn’t believe there was more data available and a quarter 25% said they were too embarrassed to ask for more data. Such findings highlight a much-needed culture shift in how businesses in the sector interact with the data insights generated on a daily business.
What we currently see is that there isn’t necessarily a problem with the amount of data being created in the financial services industry. Instead, the barrier lies in how employees access that data, how they know about its very existence and the culture behind using it.
In the fast-paced world of finance, businesses too shouldn’t overlook the huge potential locked in data that may have been forgotten or overlooked – so-called ‘dark data’. Not only will it lead to a happier and healthier workforce, but more accurate and informed decision making can help businesses in the sector create a competitive edge at a time when it is facing so much change and uncertainty.
Having embraced so much technology in recent years to transform the industry, the answer still lies with technology, but it is about making things simple. A cohesive approach that brings all company data together in one place.
Addressing this challenge is especially important as we enter the recovery stage of the pandemic. And for the financial services sector to help its customers through this crisis, they need to ensure that they are not relying solely on gut feel to provide advice.
Duncan Ash is Area VP, Global Financial Services at Splunk.
The views and opinions expressed in this Viewpoint article are solely those of the author(s) and do not reflect the views and opinions of Fintech Bulletin.