Getting the most out of digital insight: Key challenges for banks

Every year, CGI interviews our clients across all the industries and geographies we serve to gain insight into their challenges and priorities as part of our global Voice of Our Clients (VOC) program. We then use this insight to guide the strategies and investments we make to best benefit our clients and to share this insight with clients to help guide their own business planning.

During the 2015 VOC program, we interviewed 110 bank executives across 14 countries. A common challenge they talked about is managing the overwhelming and fast-growing influx of data—transactional, geolocation, social media—you name it.

Our banking clients told us they want to use this information to understand customer behavior patterns, forecast what products and services customers may need and/or want in the future, and identify customer preferences in terms of day-to-day bank interactions. However, they find it difficult to reap all of the advantages this kind of digital insight affords.

Banks have been talking about using information to gain a competitive edge, in truth, for decades now, and CGI has been helping them do it all along the way. So, why does this remain a challenge? What obstacles are getting in the way of creating the ideal world of smooth data management, analysis and value capture?

Budget
One obstacle facing all banks is the challenge of tight budgets. Gartner¹ estimates that around 60 percent of a bank’s IT budget is spent on keeping the lights on and running operations. IDC² estimates that another 17 percent of the budget is spent on risk and regulatory concerns. That doesn’t leave much for digital insight initiatives and other innovations for transforming customer experience, bank operations and overall performance.

An important part of the budget challenge is establishing an ongoing program for generating insights from data, rather than executing a series of disjointed, one-time projects that may or may not ever make it into ongoing operations. A robust, ongoing program includes plans for the integration of new data sources as they become available, for example with acquisitions, additional third-party data sources and new technology adoption. Acquisitions are a part of life in banking, and new data is going to be constantly coming into view as trends like mobility, social media, cloud services and the Internet of Things continue to unfold.

Business case
Many banks also have been challenged in adequately building a business case for digital insight solutions. Legacy systems and processes, combined with tight budgets and thin margins, have hindered their ability to justify the investment and prove how it will lead to profitable growth.

Strategy
Another major obstacle is that banks often take a short-term view when it comes to digital insight programs. Short-term projects with one-off investments aren’t enough. A broader vision and strategy are required to integrate digital insight processes and tools across the organization and deliver long-term value.

Execution plan
Even if your bank has been able to find the funds, build the business case and create a long-term strategy for implementing digital insight solutions, now what? Putting insight from data to work requires long-term commitment and effort that involves enterprise-wide change. An execution plan must be strong, comprehensive and ongoing to ensure a successful transformation.

One technique that we’ve seen to be valuable in building support for data-driven innovation initiatives is what we call a “proof of value” (PoV). It’s often possible to do a preliminary study using statistical methods to estimate the business benefits of a particular use of data. A series of these PoVs can establish the case for an ongoing program of innovation.

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¹ Gartner, IT Key Metrics Data 2016: Key Industry Measures: Banking and Financial Services Analysis: Multiyear, December 14, 2015.

² IDC, IDC Financial Insights Forecast, Worldwide IT Spending 2013-2018: Worldwide IT Spending Guide, 1H15, May 2015.