Despite all that has been written about big data in the last few years, few people understand it. A well-meaning former IT colleague of mine once likened it to a large, complex pipe organ with multiple keyboards, dozens of stops and pedals – an instrument that can only be mastered by a professional.
Many banks view data the same way: too complex and very difficult to “master”. While gathering, disseminating, and understanding data can be an enormous task, it’s not as complex as my IT friend makes it out to be.
Perhaps this lack of understanding is why many banks to this day don’t leverage their own data, but part of the “big” should include its proprietary data. Let’s focus on just one process in a bank: lending. During the origination process, an enormous amount of data is gathered including details about the borrower, physical characteristics about a property, it’s precise location, property income history, environmental reports, and sometimes information about adjacent properties. Think of the mountain of data that a large lender collects each year, and think of most of it being inaccessible. Put simply, it’s a missed opportunity and a very costly one at that.
Banks that have full access to their proprietary data have a clear advantage over their rivals: they have a database of property and other loan information that they can use when they are making similar loans. In many cases, they can review their proprietary data and repeat what they have done in the past – mining the data becomes part of the origination process. Other benefits include a greater understanding of market fundamentals and a thorough knowledge of loan concentrations.
Your data is of great value. If your institution is not using its proprietary data, here’s what you can do:
Focus on your current systems – your bank might already have the ability to gather and leverage its data! If this is the case, people should be trained on how to use it. Start realizing value without any additional expenditures.
If you don’t have a system, encourage IT to setup a task force to look into systems that will create value – make sure any candidate system has fully integrated components. Many say they do, but many times they do not.
In either case, make sure there’s the proper executive sponsorship to make it happen. As you know, it’s difficult to implement change across a complex organization so someone needs to manage it.
Be the person who champions your bank’s proprietary data. Once your colleagues start mining it, they will wonder why it wasn’t done sooner.
*Image from Shutterstock.com