Why Disconnected Data Sources Mean Lenders Are Missing the Big Pictureby Ricardo Vidal, Chief Product Officer at Oradian September 3, 2022
Traditionally, core banking systems have been regarded as a lender’s main database. While many banks rely on this core banking database, they also administer a range of other databases covering other aspects of the business.
These independent data sources are seldom connected, so banks are missing out on a truly holistic picture of their customers.
But there are enormous amounts of data available from across a bank’s operations, from risk scoring, marketing, and user generated data via interactions with agents or a digital interface.
By failing to feed this into a centralised platform, banks are unwittingly hobbling their customer relations and ultimately their potential growth.
What can lenders use data for?
If there’s one thing we can say with certainty, it’s that humans are producing enormous amounts of data with every digital action they take.
Banks already understand how important this data goldmine is. According to EY, 83% of leading financial services firms say that data is their most valuable asset – although only 16% consider themselves “excellent” in extracting value from that data.
Data can tell a bank whether their customers are paying on time, how and when their customers are using their cards, and how often they are using particular products.
This can help the management understand which of their business lines are delivering growth (and which aren’t) and provide intelligence about who to market specific products at and what features will become valuable for specific groups of users.
In addition, data analysis is useful for detecting fraud by identifying unusual activity, such as when a customer makes a purchase in an expected location or an uncharacteristic high-value purchase.
Connecting all the data you gather
Increasingly, lenders want to move to a “one data” view of their world to discover trends and opportunities in their customer base.
Having access to all this data throughout the organisation and at any point in the customer lifecycle helps banks optimise marketing and risk, and speed up automation processes.
This is a key differentiator for lenders that want to get ahead of their competitors.
Banks can harmonise all their data using advanced analytics and application programming interfaces (APIs).
These tools allow them to connect their different data sources to a single platform – like a core banking system – and make direct comparisons between difference sources of data about customer behaviour.
This is a much smarter, more efficient way of managing data.
Banks can act instantly using real-time data insights that provide them with an accurate, holistic view of their customers.
Instead of trawling through separate databases, they can see how individual customers or demographics use loans, make purchases, or operate their banking app.
This, in turn helps them make better judgements about risk management, liquidity, credit risk and so on.
Bolstering data security
All banks and financial institutions must contend with strict data security regulations.
Data breaches may mean the personal details of thousands of customers falling into the wrong hands, damaging your reputation and placing you in serious trouble with the regulators.
The cloud has enhanced security standards compared to on-premises servers, with many cloud service providers now deploying top security experts, intelligent monitoring systems and world-class protections for load and penetration attacks that strengthen banks’ defences against potential threats.
One of those threat vectors is human error, but if data is gathered and analysed autonomously with minimal human input, lenders can eliminate much of the danger posed by mistakes and maliciousness.
Furthermore, with more people aware of how financial institutions are using their data, providing them with the reassurance that theirs is being cared for properly will only enhance your reputation in any market.
What’s the right approach?
A cloud-based core banking system like Oradian answers many of these challenges. Its single-dashboard approach puts independent data sources in one place, giving you a holistic view of customer behaviour that can help you make the best decisions when rolling out innovative products and services, connecting with your end clients at the right time and testing new approaches in new markets.
Better still, Oradian’s robust security protocols can help you keep this data safe and become compliant with local regulations.
Oradian provides a flexible cloud-based core banking system that serves over 10m people globally.
Flexible and extendable, Oradian supports institutional customers across 13 countries to scale their business, to think bigger and go further.
If you would like to know more about our services or want to compare Oradian’s core banking system with your current provider, our expert team is on hand for a no-obligation consultation.
Visit our website to find out more about this.