The science of winning in financial services — competing on analytics: opportunities to unlock the power of data

Hyong Kim and Errol Gardner
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Hyong Kim: EY U.S.
Errol Gardner: EY U.K.

Journal of Financial Perspectives, 2015, vol. 3, issue 2, 13-24

Abstract: This article presents the results of confidential survey 1 data across banking, capital markets, insurance, and wealth and asset management into the role that data and analytics are now playing in their businesses. We find that (1) data is becoming a fourth “pillar” of the business for leading financial services firms, (2) a holistic approach to data is crucial for success (it is not just a technology problem), (3) leading companies are increasingly investing in data for the upside potential, rather than purely to mitigate downside risk, (4) financial services firms are bullish about their capabilities on analytics, but many admit to needing to do much more and (5) chief data officers (CDOs) are increasingly common, but are not a solution by themselves. These findings paint a mixed picture of the level of maturity in data and analytics at financial services companies. Some areas of the industry, and certain individual companies, have made significantly more progress than others. Insurers, for example, appear to be ahead of banks. Nevertheless, all financial services businesses are on the same journey, working toward a greater emphasis on decision-making that is based on the actionable insights generated from their data. They are thinking about how to overcome the obstacles encountered along the way — from fears about regulation and data privacy to the technical challenges presented by legacy systems and skill shortages — and organizing and investing in order to give themselves the best chance of doing so. Part of the challenge will be honest self- appraisal: a willingness to assess current levels of maturity in order to decide where to focus the business’s energies. New challenges, meanwhile, will emerge as companies seek to develop their capabilities. The size of the prize, however, makes these difficulties worth confronting.

Keywords: Banking; capital markets; insurance; wealth and asset management; data; analytics (search for similar items in EconPapers)
JEL-codes: G10 G21 G22 (search for similar items in EconPapers)
Date: 2015
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