I don’t know about you, but from my perspective, data volumes in excess of 1 terabyte are not new.  True, new hardware and software technology has enabled companies to process, move and manage what is now called “Big Data” much better than ever before.  Many large companies in financial services – insurance companies, wealth management, banks, and credit card companies – have been contending with the processing, manipulation and analysis of large amounts of data for decades.  Fundamentally, data is derived from a variety of sources and is ultimately used by businesses across industries to make smart decisions.

It seems other leading IT leaders in banking feel the same.  Our team was very interested in a recent American Banker interview with Bank of America’s, Catherine Bessant.  She states she hates the phrase “Big Data” and just prefers to use the term “data.”  She went on to explain the following:

“As a term, it means different things to different people, and it creates a black box or a mystery around data.”

So, the question; rather the “Big” question is whether the term “Big Data” is appropriate and considered a meaningful use of classifying data by business leaders.  Let’s explore the context of different business problems associated with “data” and its various uses from a business function perspective.

Data is derived from the following areas:

• Transactional & Application Data: A variety of input systems capture information in its various forms by financial services company where sources are from customers, retailers, processors, payment networks, financial exchanges, and others that contain proprietary payment information about the customer.
• Documents: Whether initially captured electronically or scanned at a later time, documentation in this category emanates from loans, investments, contracts, disclosures, and other material required for safekeeping.
• Enterprise Content:  Going beyond web content management, every business and organization contains rich content about their customers that must be organized, maintained, and made available for use by the business.
• Machine & Sensor Data: Derived from servers, applications, sensors, web feeds, networks, and service platforms, this type of data contains a wealth of information on customer and consumer behavior and location, consumer quality of experience, financial transactions, security and compliance breaches, as well as the state of industrial processes, transportation networks and vehicle health.
• Social Data: Information gleamed from Twitter, Facebook, LinkedIn, and other social media applications can be effective in understanding customer sentiment.  As the payments chain continues to evolve, retailers will become a rich source of consumer spending pattern data.  Moreover, further maturity of navigation based technologies with point of sale solutions will place the merchant data in a much higher value bracket than today.
• Web Data:  Any information sourced from the web through search engine technologies consumed by the business for further use in analytics.

It is then used in some of the following areas:

• Operations Management: Supporting all aspects of day-to-day management in financial services, activities benefit from Risk Management, Regulatory Compliance, Operations Decision Management, Exceptions Management, Finance Management, Alerting, and other decision support systems.
• Business Analytics:  Encompasses the use of enterprise data from all sources from within the business to understanding customer trends and patterns.  Providing the means for interpreting data that has been collected and organized into structured components for in depth quantitative analysis to support and aid in decision making is now the mainstream.  Whether its use is at the department, divisional or holding company level, the ability for self-service to various forms of real-time data for analysis is essential.
• Forecasting:  The accuracy and use of historical operational data is vital to trending analysis and forecasting.  Emphasis will continue to improved budgeting, support financial management, product profitability, sales pro-formas, marketing campaigns and other functions.
• Predictive Modeling:  Not only have competitive pressures to improve bank profitability warrant this capability, but the advent of Dodd-Frank with its mandatory stress-testing frameworks have made this essential for large financial institutions.  Leveraging data from internal and external sources to test product models, assess Basel II capital requirements, conducting risk modeling, and for other functions warrants investments in this area.
• Performance Optimization:  Managing the performance of each line of business and measuring their effectiveness using a multitude of data metrics is key to improving overall shareholder value.  While it is important to monitor performance through an enterprise reporting framework, the foundation to performance is excelling at Business Process Management and continuing to identify areas to improve information flows and work processes to bring about improved efficiency.
• Social Analytics:  Exploring and understanding how personal banking preferences and motivations through the use of social media analytics can empower financial institutions to drive growth in new customer segments. Social media analytics also helps financial institutions develop new marketing programs and fuel merchant-funded rewards programs based on the social activities and chatter.
• Web Analytics: A rich source for identifying where your customers are utilizing your services along with the related attributes is through your web analytics.  Financial institutions must evolve their use of Know Your Customer information to improve channel delivery for customers and reduce redundant services.

Analytics Use Cases in Financial Services

• Using advanced analytics to profile and segment target customers to improve marketing effectiveness.  MasterCard mines transaction data to help marketers deliver targeted advertising using its extensive database of retail purchases.
• Analyzing data to determine how people will interact in new channels. Bank of America’s rollout of their new ATMs with Teller Assist used analytics to determine whether it would decrease or increase teller transaction time.
• BI delivered around social conversations is helping companies like Walmart measure customer sentiment on their Bluebird product and uncover new opportunities for serving their unbanked and underbanked customers.
• Using financial based analytics to streamline statement creation, financial institutions can accelerate month-end updates.
• Using BI technologies to create an online credit tool, financial institutions can generate increased annual business value on average for each customer.
• Modeling data to conduct test marketing on solicitations can aid financial institutions in identifying campaigns that will yield higher response rates.  Facebook has done work with Datalogix to track whether people buy a product after viewing an ad on the social networking site. Similar strategies can be tested by banks on social networks and their websites.

I think it’s safe to say the ways in which data is used in financial services has evolved as a result of new technology.  Yet, the core components for action remain the same – the ability to sense and take action or respond.  Why not classify data by how it is being used in new ways as opposed to generalizing challenges and labeling them with the term “Big Data”?  Financial institutions will see greater executive sponsorship and funding on projects where the potential value can be defined based on a new core concept.

What has been your view on the rationale for continued use and applicability of the term “Big Data”?  How have you approached this subject within your organization?  For more of our team’s insights and strategies with “data” (or Big Data depending on your preferred choice in wording), I’d suggest you download Perficient’s Big Data Planning Guide for Financial Services.

Learn to understand and engage the digital banking customer.  Through a combination of best practices, technology tools, and efficient project team structures, financial services companies can achieve success with business intelligence and analytics.  Many banks lack a roadmap to implement programs or open the doors to their data vaults. We hold the keys to unlock our customer’s success.  Our Bank Transformation Guide dives into the use social listening, challenges of Big Data and tips to to get your organization on the right path.

Embed social, collaboration and contextual targeting in your online channels.  With the ongoing push in the financial services industry to merge, acquire and grow, it’s not too surprising to see the amount of customer data, web content, and related metadata growing at an astonishing rate. Enterprise content management (ECM) should be thought of as a comprehensive enterprise approach to unifying data and making it available at the right time, at the right place, and to the right person.  As banks look to develop a more personalized and relevant online banking experience, our Bank Transformation Guide covers the latest trends, segmentation strategies, and data governance policies to give you the ability to deliver more compelling offers and value-added services.

Remove vulnerabilities and make regulation work for you.  Vulnerabilities within a bank’s operations and IT infrastructure are cause for great concern.  As a result,  risk management and regulatory compliance should be a vital and integral part of your organization’s business strategy. To help banks address these concerns, our Bank Transformation Guide focuses on the importance of conducting enterprise risk assessments and identifies specific domains for analyzing risk within the IT department.

For details on these four trends transforming digital banking, I encourage you to check out Perficient’s engaging E-book here. We’d love to hear your opinions on these trends (and others) shaping the financial services industry and how your organization is planning for the next generation of solutions.

TriTek brings meaningful services expertise, important intellectual property assets, and a proven track record of growth, profitability and client satisfaction. TriTek’s client roster contains many of the leading financial services and insurance firms, and it has a strong geographic presence in the Northeast, with office locations in Boston, New York City, and the Washington, D.C. metro area – a hub for major financial services organizations.

The financial services marketplace continues to evolve, and if financial services organizations want to remain competitive, they must make strategic investments in technology. The acquisition of TriTek comes at a time when information has become a powerful asset for banks and insurance firms. These organizations are challenged with capturing, analyzing, sharing and governing content, across a multitude of channels, and there is a growing need from our clients for integrated, end-to-end ECM and BPM solutions.

Perficient’s Financial Services National Business Group has been providing our clients with the right information technology strategies and technologies to help them improve collaboration, information sharing and communications. With the addition of TriTek, our team has gained expertise needed to create even more powerful solutions for our financial services customers.

I’m proud to say we’re on our way to establishing Perficient as one of the premier financial services consulting firms in North America.

You can learn more about Perficient’s acquisition of TriTek Solutions, in our news release here. I’ve shared this news on our IBM blog as well.

Please join me in welcoming TriTek to the Perficient team.

New Mobile Banking Features Rolled Out

It seems a post-PC era is eminent and customer expectations are turning up the pressure on banks to continue to invest in digital channels.  As a result, new mobile banking applications and capabilities are helping to develop a competitive advantage, reduce costs and develop a more seamless mobile banking experience.   

• U.S. Bancorp’s Plans to Remove Friction from Mobile Banking
• Bank of the West the First in US with No Log-in Pulldown Balance Lookup
• Regions Bank Rolls Out Innovative, New Mobile Deposit Apps
• City Bank Texas launches Picture Pay mobile bill payment service
• Banks Add Card Controls to Their Mobile Banking Apps

Mobile Payments: Apple vs. Amazon 

To remain “top of mind” and “top of wallet” in consumers’ perception, banks must define their tactical and strategic plans in concrete terms and decide which payment capabilities best represent customer needs. Banks must rationalize digital payments as a key customer channel to be competitive against emerging capabilities of non-bank payment providers.  Juniper Research estimated that worldwide mobile payment volume would reach an incredible $240 billion this year making this a hard trend to ignore if you’re a financial services provider or bank. 

• Amazon pitches anonymous mobile payment system
• How Apple and Amazon Will Shape Mobile Payments
• Apple Has Amazing Stuff Coming, Says Cook – But Not Until Fall

Portals Provide Visibility for Investment Banks

The latest portal and content management solutions provide financial institutions will a means to communicate, collaborate and leverage customer information for contextual targeting.  As banks look to develop a more personalized and relevant online banking experience, segmentation strategies and responding to digital customer behaviors will give them the ability to deliver more compelling offers and value-added services.  Portals and content management tools also allow for these capabilities, in addition to easier access to and management of financial information, investments and trading.  Internally, the latest technologies for social business and collaboration improve efficiency, reduce call center traffic, promote knowledge sharing, and can even incorporate an enterprise social network.  

• BNY Mellon boosts AccessEdge collateral management portal
• Bank of America Merrill Lynch Launches New Trade and Supply Chain Portal: Trade Pro
• The Future of Bank Product Strategies

The Bank Branch of the Future

Banks are faced with evaluating and rethinking the “bank branch”  as technology and mobile consumers reshape the retail bank of the future.  Online and mobile banking will continue to support a shift from traditional branches to more emphasis on digital channels. However, today’s leading banks haven’t completely abandoned the bank branch network.  Financial institutions are trying to find the right balance to deliver a unique branch experience.  Interactive technologies, kiosks and self-service banking stations using iPads, as well as video and web conferencing are all tactics banks are exploring to create a digitally enabled branch and improve sales.

• Bank of America overhauls bank branches
• Branding the Branch, Digitally
• Citi expands CitiDirect Banking Evolution service
• First Look: How Wells Fargo Envisions a Smaller Branch
• AIB opens branch to showcase digital services

Core Banking Transformation

Leading a core banking transformation is a major undertaking that requires CIO leadership skills and  investment in technologies that help modernize their existing systems.  However, banks soon will not have the option to push off  this core transformation project.  The benefits far outweigh the negatives, as core modernization allows banks to be more agile and respond to changing market opportunities.  During this process of implementing new banking platforms, the use of cloud computing services and need for systems integration will become increasingly important. 

• 2013 Bank Transformation Guide
• Transforming Banking Core Systems: Lessons from Busey Bank
• The Impending Modernization of Your Banking System: You Can’t Afford to Wait!
• Banks Must Ditch Legacy IT
• Inside National Australian Bank’s Core Transformation
• Mashreq Bank  replaces 40 legacy systems with Oracle Flexcube

Top FinServ IT Investments Impacting Healthcare

The author was spot-on with covering several of the relevant fintech opportunities we’re seeing, but he left a very important one off the list (I’ll elaborate on that in a minute). First, here’s a summary of the top three compelling opportunities for entrepreneurs investing in health IT and their application to financial services:

Cloud computing –  The move to cloud computing has potential to cut significant costs across both of these industries.  In healthcare, technology vendors have given healthcare systems a reason to move from legacy IT systems by qualifying for Medicare and Medicaid Electronic Health Records (EHR) Meaningful Use Incentive Programs.  The author also brought up data storage as another opportunity for healthcare organizations. Providers dump nearly 90 percent of the data they generate due to storage issues.  The same is true in financial services. On average, only 20 percent of a bank’s data is used for analytics.  This data provides significant opportunities for saving lives, reducing risk and identifying new sources of revenue.

Big Data analytics - We’ve talked a lot about the benefits of leveraging the vast amounts of data financial institutions possess on our blog and in our discussions with clients.  The same is true for healthcare organizations.  Tools like predictive analytics help predict medical outcomes and support clinical decisions.  This information is changing the way doctors practice medicine.

Mobile – Mobile health capabilities are advancing the way healthcare is administered and preventative health services are communicated to patients.  We know that mobile is a game-changer in banking.  Mobile has drastically reduced banking transaction costs with the addition of mobile bill pay. Mobile has not only drastically changed both the customer experience, but has impacted business models for many banks.  Mobile will continue to be a top channel and healthcare is following closely in their footsteps.

The Big Opportunity for Both Industries

I mentioned earlier that the article left a big fintech innovation off the list.  So what might this opportunity be?  The answer is Payments.  The Affordable Care Act (ACA) has brought about health insurance reforms that are being rolled out over the next few years.  As part of the ACA health care law, the government is establishing a “Health Insurance Marketplace”.  These insurance “shopping centers” offered by each state will consist of an online exchange for consumers to buy affordable and qualified health insurance plans.  Are these exchanges ready for handling a large volume of individual payments and ecommerce activity? Many of them are not.

Parallels extend beyond technology as we compare these two industries.  Just as we’re seeing consumer-driven banking in financial services, healthcare is seeing a similar shift in how patients receive care and obtain medical insurance as a result of the ACA.  As consumers tap into into healthcare infrastructure for new capabilities, there are several key areas where payment players and financial services technology innovators will play a critical role for guiding consumer-driven healthcare and payments.

1. Payments Integration – As health IT moves to new platforms and adds new payment services the need for integration of legacy systems and electronic records will be increasingly important. Just as care providers can improve care and deliver a better patient experience by sharing information, creating a master view that integrates payments information greatly improves remittance processing and compliance, reduces operational costs and supports cross-agency collaboration.

2. Retail Experience – Healthcare payments will benefit greatly from learning to make these experiences more retail like.  As ‘healthcare as consumers’ unfolds and consumer needs evolve while “shopping” for insurance, health IT will use lessons learned in financial services to make the shift in healthcare payments with providing online exchanges that focus on efficiency and offering value-add services.

3. Medical Payment Fraud – Medicare and Medicaid payment fraud continues to be a major driver for healthcare costs in the U.S.  Similar to fraud and risk in the financial services industry related to card transactions, healthcare has an opportunity to implement similar processes to reduce medical payment fraud and better monitor claims and payments.

Both healthcare and financial services are in a major state of change.  As both of these industries learn to manage change and better address new technology challenges, the future looks bright for not only these organizations but those that serve them.  What are your thoughts on the future of payments, in not only financial services, but in other industries like healthcare?

For a perspective on healthcare technology, I’d encourage you to read the post on our Health IT blog.

We all know that successful banks are building an innovation strategy by leveraging technology.   What’s interesting is that customers have become the driving force in shaping financial products and services in the financial services and banking industry.  In this Perspective I talked a lot about the customer experience and channel convergence – two very important drivers impacting how banks think about next-generation product strategies and plan for sustainable innovation.  As consumers rely more on mobile devices like smartphones and tablets, we’re beginning to see how these touchpoints and customer interactions are shaping what the bank of tomorrow will look like.  Social networks like Twitter and Facebook are becoming even more relevant in banking for using social listening, measuring sentiment, and even leveraging these services as a platform for online banking and digital payments.

I also touched on technology challenges and how financial services companies can find the right balance with banking services and fintech trends.  As we hear more and more about agile analytics and Big Data to create a 360-degree view of the customer, banks are turning to the fintech community for guidance, to support their technology needs, and to implement these data management and analytics strategies as they evolve product and service strategies in an increasingly competitive financial services landscape.  In summary, there’s a lot for product and channel managers, innovation officers and financial services marketers to think about.  In conjunction with Perficient’s bank product strategy Perspective, I’d encourage you to download our recent Bank Transformation Guide covering these trends and IT issues more in-depth.

Early adopters are some of the best champions of new technologies across the internet, and discussion of the solutions in engaged communities that don’t serve a technology-centric audience demonstrates the increasing value those adopters are finding. Reframing the payment apps, LevelUp and TabbedOut, as “EZ-Pass” equivalents in the public space can’t hurt mindshare as well. Banks are in a unique position of being a ‘trusted source’ for payments, and they can learn a lesson from these third-party apps as they grow in popularity. Some of the specific pain points the apps are alleviating for the end-users are not pain points the bank might have initially imagined.

Digital Channels Continue to See Biggest Focus

In a recent Forrester report, “The State of North American Digital and Multichannel Banking 2013″, we learned that digital banking investments continue to increase as customer touchpoints evolve.  IDC also released a study on tablet sales overtaking PC sales in 2013 and laptops in 2014.  Based on these figures it seems a post-PC era is eminent and customer expectations are turning up the pressure on banks to continue to invest in digital channels.  As a result, mobile and tablet banking will need to focus more on executing a multichannel strategy that addresses product sales, customer service features and new mobile capabilities.  

• The Tablet is a Distinct Channel, and Banks Must Design a New User Experience For It
• RBS launches in-app ‘Mobile Chat’ for customer service on the go
• Tablets’ Popularity May Call for How CUs Leverage Apps’ Appeal: Print Preview
• Two Thirds of JP Morgan Chase’s and Bank of America’s Mobile Traffic is ‘Mobile-Only’
• Tablet banking set to soar – Juniper Research
• How Good is Your Bank’s Website Performance?

P2P Lending and Other Payment Disruptions

To remain “top of mind” and “top of wallet” in consumers’ perception, banks must define their tactical and strategic plans in concrete terms and decide which payment capabilities best represent customer needs. Banks must rationalize digital payments as a key customer channel to be competitive against emerging capabilities of non-bank payment providers.  Juniper Research estimated that worldwide mobile payment volume would reach an incredible $240 billion this year making this a hard trend to ignore if you’re a financial services provider or bank. 

• RBS, Natwest to launch P2P payments service
• Y Combinator-Backed Balanced Adds Bank Payments To Its Peer-to-Peer Payments Platform
• Venmo’s new tool flips mobile payments around
• Peer-to-Peer Platforms are Disrupting Bank Lending Around the World
• Popmoney Outperforms in P2P Payments

The Need for Data-driven Decisions

While it’s not a new term to the financial services industry, the evolution of Big Data is expanding the way marketing is understood, led and practiced.  As banking CMOs take on this added responsibility and tackle Big Data, the need for collaboration with CIOs to enable strategy and transform their organizations is apparent to turn actionable insights into marketing and organizational results. 

• From Science to Art: Big Data Can Paint a Clear Picture for Banking CMOs, CIOs
• Big Data at J.P. Morgan: Delivering The Firm
• How to Reach Enlightenment with Big Data in Financial Services
• The next big data thing for banks
• Banks are just data vaults

FIs Plan for the Future with PFM

We’re seeing more movement towards banks developing a more integrated strategy for personal finance management (PFM) tools as part of their online banking services and tablet banking applications.  PFM helps strengthen the banking relationship by providing value and greater visibility into finances across multiple channels.  As the rapid adoption of tablets continue to challenge smartphone growth, financial institutions can leverage unique experiences and interactions for customer touchpoints to enhance the digital banking experience.

• Highlights from PFM Session at Bank Innovation
• PFM 2.0: Forget Pie Charts, Customers Want Help with Real-Time Decisions
• Consumer Appetite for Comprehensive, Mobile PFM Grows

Customer Experience: Topic of Bank Innovation Panels

The Perficient Financial Services team recently attended Bank Innovation 2013 where we participated in panel discussions and spoke to a great group of banking executives, technologists, marketers and strategists.  We’ve compiled some of the blog posts from the organizers, vendors and attendees covering the overwhelming amount of insights shared during this two-day event. 

• 6 Big, Hair Ideas from Bank Innovation 2013
• Top Banks Shine on the Channel Convergence Panel
• Bank Innovation 2013 Gives Insight into What’s on the Minds of Bankers
• Highlights from Organizational Innovation Session
• Andera’s Blog: Bank Innovation Day 1 Recap
• Focus on the Customer Today to Create the Bank of Tomorrow
  

The attention to Big Data also raised the question among conference attendees stating, “What am I going to do with Big Data when I can’t even get a handle on my regular data?”  This is a valid point and a common data management challenge in the financial services industry.  As Chris Skinner commented in a recent blog post, banks are often thought of as just “data vaults” and they need to build for the future – it starts with thinking of data as a strategic asset.

The Perficient Q&A on the Financial Brand website entitled, “From Science to Art: Big Data Can Paint a Clear Picture for Banking CMOs, CIOs”, features our business intelligence and enterprise information management experts tackling some of these tough questions about the way banks and credit unions view, understand, lead and implement their marketing programs for 21st century banking.

Learn more about Perficient’s Big Data solutions and services. 

On social media, there were a couple “wows” coming from the audience as we heard about the commitment to channel convergence at these institutions.  For me, one of the biggest statements of the session came from USAA’s Steven Armstrong when he told Bank Innovation attendees that it was their CEO’s strategic objective to have every capability on mobile in the next four years – yes FOUR years.  That’s a lot to think about, and functionality to address, across their mobile and tablet platforms!

One of the more amusing comments was hearing Armstrong refer to USAA’s website as a “legacy” platform for them. For many banks, they’re still trying to make online banking a comprehensive service delivering a positive experience for their customers. Check out some of the top tweets from this session.  

Some key takeaways from this session:

1. Digital disruption caused by technology innovators and behavioral changes in consumers have caused a big change in bank models today.

2. The bank customer experience today is siloed and needs to be brought together across platforms.

3. As Jelmer de Jong of Backbase stated, the Internet can be more personal. Focusing on enabling digital relationship marketing across channels will be the future of the customer experience in banking.  This can be achieved through contextual targeting and customer segmentation using mobile, web and content management tools.

It will be interesting to see what adoption and penetration for some of these channels looks like in the years to come.  Will I submit a mortgage application on my smartphone someday soon?  Instead of calling a contact center, will I video chat with a bank customer service representative on my tablet?  Will my bank have an online interface for Facebook?  Probably.