Data-driven competitive advantage in the financial services industry

There is an urgent need for banks to be nimble and adaptable in the thick of a multitude of industry challenges, ranging from the maze of regulatory compliance, sophisticated criminal activities, rising customer expectations and competition from traditional banks and new digital entrants. As banks find their bearings in this landscape, what appear to be insurmountable odds are in fact opportunities for growth and competitive differentiation. 

Customer centricity is top of the agenda for any business and it is high time for banks to double down their efforts to continue thriving. A study by Deloitte revealed that consumers viewed their primary banks less favorably than their favorite brands, with up to a 24 percentage point disparity in areas such as perceived quality of products and services, value and customer knowledge. The same study also stated that having stronger online data security, being able to conduct more banking transactions online and having more real-time problem resolution were the top priorities of consumers. 

Financial institutions need a data management platform that can keep pace with their digital transformation efforts.  It must support a variety of data sources to enable timely and relevant services to meet customer needs effectively while maintaining flexibility to adjust to evolving market developments.  

Cloudera’s customers in the financial services industry have realized  greater business efficiencies and positive outcomes as they harness the value of their data to achieve growth across their organizations.

Addressing new customers and markets

Data enables better informed critical decisions, such as what new markets to expand in and how to do so. It provides direction for a robust business strategy that has taken into account risks and ways to manage them.

66% of Indonesia’s 275 million population are unbanked, and do not have access to financial products and services. With the aim to improve financial inclusion and address the needs of unbanked Indonesians, Bank Rakyat Indonesia (BRI) wanted to reach out to this customer segment. Cloudera worked with the bank to construct a five-layer IT architecture with AI and ML capabilities, enabling it to store, consolidate and process information from multiple data streams on a single platform. This brought about more detailed analysis on customer transaction data, 40% fraud reduction and an improved credit scoring system.  This enabled BRI to develop a new digital microfinancing product for customers that were formerly assumed too risky to be served. 

Sharper business insights gleaned from transaction data unveils previously untapped opportunities in the form of new customers and markets. Better visibility of their customers assures banks that they are not exposing themselves to additional risks in the process.

Personalizing the customer experience

Customer retention goes hand in hand with customer acquisition in a successful growth strategy. Compared to just two years ago, more customers are now digitally interacting with their bank.. As a result, banks have a new impetus to curate an unparalleled digital customer experience that translates to long-term brand loyalty. This includes delivering personalized, timely and low friction engagements, all while minimizing risks and reducing costs. 

Rabobank, headquartered in the Netherlands with over 8.3 million customers worldwide, recognized how the immense volume of data they maintained could provide better insight into customers’ needs. Working towards delivering a strong customer experience and shortening time to market, the organization sought to create a centralized repository of high-quality data which could also allow them to stream and conduct real-time data analytics to rapidly derive actionable insights. 

Since leveraging Cloudera’s data platform, Rabobank has been able to improve its customers’ financial management. By analyzing loan repayment patterns and real-time transaction records, Rabobank provides customers with insight into their financial situation and can recommend personalized, relevant products to assist them with their financial goals.Real-time data analytics has also augmented the bank’s risk management as it detects warning signals of potential repayment problems.In this manner, the bank can proactively assist customers and avoid defaults. 

The need for speed

There is now greater demand for business and customer intelligence and traditional methods of batch processing can no longer cope with the influx of data, most of which is unstructured. Streaming analytics captures information in the now, and has the ability to access data from inside the business as well as external sources to help businesses stay agile.

Besides identifying key event patterns and escalating crucial alerts based on predictive insights and actionable intelligence, real time analytics and stream processing fortifies risk management by enabling preventive measures before an incident results in damage. 

When pandemic lockdowns swept through Indonesia, Bank Mandiri needed to ensure that their systems could integrate data sources to generate insights efficiently while supporting their teams working remotely. The bank established the Enterprise Information & Decision Platform (EIDP) as a single source of truth running data integration on the Cloudera platform. This also provided the foundation for the bank to build three dashboards in a day to address pandemic-related developments such as securing liquidity above the safety level and safeguarding employees from risk of exposure to the virus. The dashboards informed decisions on whether to open or close branches as needed, ensuring that transactions could proceed with minimal disruption. This platform afforded more scalability and agility for Bank Mandiri to ramp up their daily data processing to 10 million records each day while shortening the time to process data from 7 days to just hours. Real time monitoring helped avoid estimated losses of IDR 15 trillion (USD 1 billion), which could have resulted from lack of visibility into the bank’s liquidity status, and prevented potential losses of approximately IDR 105 billion (USD 7.3 million) of transactions per week at each of the bank’s branches.

An end-to-end platform to power digital transformation

IDC Financial Insights predicts that 85% of tier 1 and tier 2 APEJ banks will curate an infrastructure strategy that integrates multi-cloud and hybrid cloud environments to meet their infrastructure needs by 2023.

The pressures banks face call for  a versatile end-to-end platform designed to drive insights, intelligence, and action from the data. Cloudera Data Platform (CDP) is an enterprise data cloud that manages the end-to-end data lifecycle – collecting raw data at the source to drive actionable insights and use cases.  Cloudera offers an integrated suite of proven and open data management tools and analytics engines, to run multiple analytical workloads that inform – personalized credit offers and financial advice, predictive risk modeling, improved regulatory reporting, timely fraud detection and more.  CDP can be deployed on-premise, private or public clouds or hybrid cloud to best suit a financial institution’s requirements. 

Facing old rivals and new contenders in the financial services market, firms demand a strategic use of the data available. Organizations who embrace transformation fueled by data will develop the business agility and heightened competitiveness to excel in the years ahead. 

For more information about how our hybrid data cloud platform powers business intelligence for financial services organizations, view this white paper.

Mark Micallef
Mark Micallef

VP, Asia Pacific & Japan

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