Banks in the early 2020s have a vast amount of data at their fingertips. Yet many are failing to reap the benefits that this should offer. Overwhelmed by challenges accessing data and inconsistency among data sources, small and midsized institutions frequently neglect data governance and strategy in favor of quick fixes and tactical Band-Aids. Poor productivity, wasted time on reconciliations, and regulatory non-compliance will eventually take a toll too high for small financial institutions (FIs) to offset.
In our upcoming webinar, Driving Data Maturity Through Strategic Planning, I will be joined by Aite-Novarica’s Head of Banking & Payments Christine Barry and Republic Bank of Chicago CIO Madhu Reddy for a panel discussion on how small to midsized financial institutions can institute strategic planning processes around data and advance their data maturity level.
Creating a holistic data strategy that addresses all aspects of the data ecosystem enables banks to truly partner with their clients, deepening relationships and leveraging opportunities for cross-sell throughout the business. Sharing data across the bank reduces friction in all manner of processes, including onboarding and online account opening.
Banks that take the right steps toward achieving a high level of data maturity will have an edge over the competition—including other banks and fintech firms—when it comes to meeting ever-heightening customer expectations. They will be able to identify and resolve problems more quickly, gaining both tactical and strategic advantage in the long term.
However, it can be challenging for IT leaders to identify where to start and how to proceed on the path to data mastery. Aite-Novarica research on data identifies several best practices for IT organizations at community banks and credit unions, including the following:
- Enforce data governance using policies, procedures, and automated tools. Tools are very useful for saving time, but on their own they will not be enough to ensure success. Enterprise-wide policies and procedures such as a data dictionary or thesaurus save time and reduce confusion across the organization.
- Consider data an asset whose value can be increased by combining and transforming. Banks have access to more data than ever before, and many institutions choose to augment their internal stores with third-party data. Once connectivity has been established throughout the data ecosystem, the potential for insights multiplies.
- Incorporate data volume, variety, velocity, validity, and veracity into the data roadmap and architecture blueprint. Creating enterprise artifacts, such as a data roadmap and an architecture blueprint, is key to ensuring that data maturity initiatives stay on track over time. These artifacts should address the realities of the big data age—volume, variety, and velocity—while also ensuring validity and veracity. If the data isn’t reliable, it can undermine the entire strategy.
Given the regulatory and market risks of ignoring data needs, and the numerous benefits that banks can obtain through maturity, it is no wonder that data mastery is a crucial priority for small to midsized FIs in 2023. For more information, ideas, and best practices, click here to register for our upcoming event Driving Data Strategic Planning and Maturity.