17/04/2018

If, as stated “Data is the future oil”, then Banks are sitting on the top of huge wealth reservoirs!!

Through decades of banking operations, banks have accumulated huge volumes of data that is currently spreading across various operational and analytical systems, it has grown exponentially in the past few years. The unprecedented growth is driven by a complex, more frequent and highly demanding compliance and regulatory requirements, forcing banks to maintain volumes of data covering years of history… a wealth under formation!

Many banks recently became aware of the fact that their data is one of their most important assets. Hence, they have started to exploit the benefits of extracting some of the important data and transform it into insights to develop new products and enhance their services, and build niche market position. But, the real utilization of such an asset is still at its minimum, limited to internal use. Moving forward, banks should be encouraged to consider new methods to transform the crude data into insightful information, which will be an appealing option to be used outside the bank boarders for consumption by info-hungry institutions and FinTechs who definitely lack such wealth. It can be totally understood why banks are reluctant to share their data with what they consider a new competition, but it is something inevitable. With initiatives like PSDII and GDPR applicable in Europe May 2018, a wave trend will hit every bank in the foreseeable future. Moving back and forth between the fears of competition and the enforced sharing regulations, there is a window of opportunity for banks to run smartly and generate new revenue streams through Assets Shared Investment.

Assets sharing for revenue generation requires an investment in the preparation stage. First, banks have to build proper technologies to transform data into information that can generate monetary value from external consumption. Second, to create various business models for shared revenue generation through an ecosystem of partners, commercial networks and FinTechs. And finally, to deliver the proper information access and delivery channels with proper partners onboarding process. It should all be done within a regulatory and compliance framework that ensures only PSDII licensed partners can share the information under the GDPR regulations to protect of customer information and bank operations, thus minimizing various risks for the bank. This ecosystem of partners’ network will work as the extended arms of the bank, thus utilizing the information assets to generate more value and revenue.

This most viable option to maximize the utilization of data is by transforming the current data platform of banks into a huge information extraction system will ensure that every bit of good data becomes an information Coin!

 

Pio-Tech Sparks, Sharing ideas with the financial community, copy writes protected

Author: Rand Hashem