As banks move towards digital banking, data is set to grow at a rapid rate and will come in various forms - structured and unstructured. Instead of simply storing this data, banks could apply analytics to it to reveal insights, which could be hidden previously due to the high cost of analysing a data set. These insights could then be used to improve existing services and/or develop new products to ultimately gain competitive advantage and improve profit margins.
With data having such potential to affect the business, is there a need for a leader who is responsible for driving innovation and transformation via strategic data use? Norishige Morimoto, Director of IBM Research, Tokyo, shares with Bank IT Asia his thoughts on the topic.
Bank IT Asia: Why is there a need for banks to appoint/invest in a CDO?
Norishige Morimoto: With data growing at an unprecedented rate like never before and a growing emphasis on leveraging data for competitive advantage, many financial institutions (FIs) have actually been ahead of the game in appointing CDOs for quite some time. This early adoption is primarily driven by the complexity and competitive nature of the Financial Services industry.
To ensure a profitable growth and relevance to their customers, FIs need to think out-of-the-box and do things differently. The vast pool of information available to them needs to be mined to identify patterns, trends, risks, and opportunities in data; discover new insights and build new algorithms and models to move data science into applications, match the right data system with the job at hand -- all of which need a different type of skill set. Hence, the appointment of a CDO makes for a good investment.
Could you share how CDOs can turn data into dollars for FIs, thus driving business value?
As the digitisation of business and consumerism change the volume, velocity and variety of data, business needs are changing as well. This business evolution highlights several opportunities and issues that drive the requirement to create a C-level position to oversee an organisation's data assets in five areas:
i. Data leverage
Data leverage involves finding ways to use existing data assets to advance the cause of the organisation. The objective may be to uplift operational efficiency or productivity, boost the brand image, improve top-line revenue, or innovate for competitive differentiation and analytic advantage.
ii. Data enrichment
Often relying on the revenue or savings created through better data leverage and monetisation, the next opportunity CDOs tackle is data enrichment, whereby existing datasets are augmented through the combination of fragmented internal data sources, the acquisition of external data from government feeds or social media sources, and the integration of a business partner's data.