Analytics competency will be a crucial competitive differentiation
Data will be fundamental to the way financial services make money in 2030. Yet many CEOs are asking the wrong questions – most are responding incrementally and, at best, tactically with better front-end digital services for customers or process improvements in the back-office. But they’re not addressing the more fundamental issue – that their very business model will need to change. And fast.
Lessons need to be learnt from other industries – take automotive – rather than focusing their energies on minor adjustments to preserve their traditional car sales businesses. Rather, they are reinventing themselves around concepts such as mobility and data – arguing that the digital ecosystem will generate higher revenues than automotive manufacturing.
With open architecture and a platform business model dominating FS, data analytics and Application Programming Interface (API) management must become core competencies. With empowered and intelligent customers able to make choices quickly and easily, firms unable to deliver a frictionless and bespoke proposition will become irrelevant.
This will play out differently according to the financial outcome sought. In insurance, for example, data will underpin much more accurate risk-based pricing, while in banking it could support better stewardship of the household finances, from utility switching services to advice on spending and budgeting.
Crucially, however, FS businesses will have to win the trust of customers who are much more aware of the value of their data – and much less willing to give permissions for its use without perceiving a clear utility to them.
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