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also be put at the service of customers, if they are flexibly installed.
Compliance typically eats up any spare IT budget at established banks, leaving none for customer-focused BI. The trick is to harness existing internal technology for a new purpose or deploy cheap external tools in a secure environment.
Any BI money that is released tends to go on providing a ‘single source of truth’ for regulatory reporting purposes – and only then if the underlying groundwork has been done to collect, tag, aggregate and share data across complex long-established banks that have often gone through numerous mergers. Tier 1 institutions span borders; different brands; and often have siloed operations across investment, retail and commercial banking arms. This makes exposing data across silos and running a customer- centric organisation very difficult.
As Peter Serenita, HSBC Group’s Chief Data Officer (CDO), is all too aware: “It is much easier to swap banks than it has ever been. We need to be responsive to evolving customer demands. Banking is a customer service business that is supported by data. At this time most BI at a bank is still on-premise. But that does not discount the use of cloud technology in future…the essential use is for customer service.”
He adds: “Internal clouds are being deployed in order to react quickly to fast moving data and technology needs. The move to external clouds is slower as data privacy must be a key focus. Early adopters tend to use external clouds for non-customer related analysis, such as the investigation of trends surrounding predictive interest rates and so on.”
Big Data
BI may have more of a business focus than individual customer-centric end uses at present, but in a Big Data world where unstructured information is proliferating across social media and other platforms this should change over the longer term. The challenge for banks is to capture this data and align it with their own structured data in a uniform, secure data environment that can be easily mined and flex towards multiple end uses. In order for this to
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happen, however, a lot of groundwork is needed to ensure that banks are truly in control of their data, sufficient to be able to interrogate it and unleash BI tools effectively upon data lakes.
“You are seeing banks creating new positions for CDOs tasked with governing and monetising the bank’s data assets,” says Todd Winship, Temenos’ Product Director for Analytics. “New technologies are being utilised to leverage data more effectively: machine learning, stream analytics, data visualisation and so on are being used to expose the value. It is an evolution, however, with some banks lagging behind, while others advance.”
According to Paul Thomalla, SVP, Global Corporate Relations and Development at ACI Worldwide, it takes time to “decompose” analogue or old systems and move to modern digital systems at established banks. “There is data everywhere, but not necessarily a megabyte of intelligence,” he says. Useful information needs to be exposed enterprise-wide and put quickly to the service of the customer but it is not easy.
“There is a lot of talk about open application processing interfaces (APIs), common messaging like ISO20022 and standards and financial utilities, all of which is similar and designed to overcome legacy, reduce costs, enhance compliance and/or support the drive for digital banking,” says Thomalla. “But cloud-based BI that is responsive to Big Data will only come after this reformation work is done. Banks must first be in control of their IT and data.”
BI sits in the middleware layer and is simply not the top priority, according to Thomalla. “It will have to wait until more immediate compliance concerns have been addressed,” he says, “such as effectively connecting to and utilising real-time payment platforms or coping with the EU’s Payment Services Directive (PSD) 2 stipulations.”
Whether banks choose to place their BI systems in the cloud is also a moot point. An internal cloud is fine but a hybrid or public cloud is more difficult due to security, privacy and commercial concerns. Each bank must follow their particular path.
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