Cash from chaos: make money with data

Egidio Zarrella, Asia Pacific head of banking and capital markets, KPMG, says that banks sit on huge amounts of customer data. The problem is that much of this data is stored in non-digital formats, making it difficult for the bank to consolidate a single customer’s data into a single repository. 

How do you convert that data into meaningful information which helps banks better serve customers’ financial needs and also generate revenue for the bank? 

This predicament is not a bank exclusive. Nearly every business who values customer loyalty recognizes the imperative to understand their customer-just as “mom-and-pop” stores in small rural communities have close relationships with every member of their specific community. 

Thus the renewed-almost manic-interest in analytics.

Manic analytics 

Practitioners and observers believe the convergence of data and analytics will drive a shift in how businesses compete and differentiate themselves. 

Toos Daruvala, a director in McKinsey’s New York office, says that “every single major decision to drive revenue, to control costs, or to mitigate risks can be infused with data and analytics. [This] will be a differentiator for some period of time.” 

What to do with the right data? McKinsey lists three main benefits of having granular access to data:

• Capture a greater share of market segments and deeper penetration (wallet share) of existing customers
• Increase the effectiveness of cross-selling, enhancing the ratio of products per customer as well as “customer stickiness”
• Enhance the customer experience, based on a targeted approach to customer relationships 

Wrangling data-challenge and opportunity 

IDC predicts that by 2019, 40% of IT projects will create new digital services and revenue streams that monetize data. The analyst recommends that CIOs “focus on [new methods of] data monetization, real-time orchestration, and service innovation,” while also looking at current systems to see where they can leverage that data. 

To prepare CIOs and their organizations for new monetization methods, IDC offers a few implementation suggestions, including:

• Build a cohesive organization-wide strategy for data organization.
• Put an innovation team in place that’s comprised of IT and business employees that review current and potential systems/applications that can be monetized.
• Create information architecture to include internal and external data sources to enable instantaneous data analysis and market intelligence.
• Establish a strong governance with full stakeholder involvement and a full range of automated policies.  

In the MIT Sloan Management Review article “How to Monetize Your Data,” authors Barbara Wixom and Jeanne Ross suggest that companies can take three approaches to monetizing their data: (1) improve internal business processes and decisions, (2) wrap information around core products and services, and (3) sell information offerings to new and existing markets. 

While each approach is very different in the types of capabilities and commitments required of the organization but they also represent an important opportunity for the organization to create a defining moment for itself in the marketplace. 

Analyze me 

Cyrus Daruwala, managing director of IDC Financial Insights Asia Pacific, reckons that a bank holds about 1 gigabyte of data for each customer. “What I do, what I click, what I swipe, where I withdraw, where I use my ATM, my debit, my credit, geotagging, where I go, where I travel,” he says. “I generate a truckload of data.” 

“Stop segmenting me as an individual in a database segment-look at what I’m doing. If my data shows that I travel a lot, then create an ecosystem that caters to my travel schedule. Trending data can show you a lot about a customer.”

There’s more than one way to monetize data. What’s common to every business is management’s commitment to a specific approach for mining customer data.