This is part 1 of a 4-part blog series on banking and data maturity and the effect of legacy systems on customer experience.
Financial institutions face a number of tough data challenges, from the need to quickly process large volumes of complex financial information from diverse sources, to a strict but fragmented regulatory environment. Over time many have built a way of doing business and processing data that works for them. And while this might not be the most efficient or the most effective, it’s all that they know and it’s been successful. Until now…
Vulnerable to Disruption
Millennials and digital natives who’ve grown up with the Internet are driving customer expectations for fast self-service and omni-channel engagement. Because newer companies have been built with technology baked into their models and platforms from inception, they’re starting to win over these and other customers while surpassing legacy-based companies when it comes to user experience and customer service. One reason is that these digital native companies universally excel at using analytics in these areas.
Across leading financial services companies there’s lagging adoption—especially in web, mobile and social analytics. This is indicative of the analytics maturity gap between digital native companies and traditional companies and illustrates why traditional financial services companies need to accelerate analytics maturity to be more competitive. And while financial services firms are the most analytically advanced among major industry segments, many nonetheless struggle to evolve these analytics efforts into fully realized, organization-wide and customer-facing capabilities.
But, according to the International Institute for Analytics™—which conducted research exploring the relationship between analytics performance and success in the financial services industry—there’s a positive association between a company’s analytics maturity score and its overall adoption of analytics for marketing and customer engagement. However, analytics maturity within the industry varies widely by sector, and, as you can see from the chart below, financial services ranked as the most digitally mature, while insurance ranked as the least.
Strategic Implementation of Analytics
The main reasons for modernizing systems include pace of change and changing requirements. This has often resulted in a jump-before-you-look approach. But analytics maturity is about more than just buying technology or counting transactions. You don’t want to simply upgrade your technology without thinking about implementing analytics as a strategic transformation involving people and processes working in tandem for advanced analytics capabilities. It’s vital to get leadership on board to cultivate a data-literate workforce that knows to trust data over gut instincts and rely on it for decision support. And while market dynamics may foster an increased appreciation for analytics, full implementation is rare—even among the “best-in-class” companies.
The Value of Digital Transformation
According to Gartner, through 2020, every $1 invested in digital business innovation will require enterprises to spend at least three times that to continuously modernize the legacy application portfolio. But there’s a valid reason behind this spend. 52% of digital leaders cite lack of access to customer data as a top challenge to maturing personalization initiatives.1 So while this isn’t an inexpensive proposition, digital transformation is necessary and more than just a simple upgrade. It’s a lengthy and time-consuming process that needs to be done right. And like any system or process, it needs to be constantly monitored, improved and maintained.
Build Your Foundation
It’s crucial to support these efforts at data integration and data-driven culture with analytics follow-through: the actual implementation of advanced systems and capabilities, fully matured throughout the organization. No effort is complete until you have a solid framework to implement strategy, measure the impact of your activities and leverage those learnings to further build out your architectures and processes.
In our next post, we’ll touch on the pain points that banks are facing due to their legacy systems, and how technology companies are leading the way.
1Forrester The State Of DX 2018: Priorities Thwarted By Legacy Foundations: Benchmarks: The Digital Experience Delivery Playbook