How ‘data fabrics’ can transform the way financial services firms use data

Last year, many physical bank branches were unable to open as a result of the lockdowns to mitigate the spread of the novel coronavirus.

Customers who were reliant on these branches for their banking needs – particularly older customers or those in developing economies – found themselves unable to carry out routine tasks such as receiving funds or consulting with a financial adviser. As a result, they were forced to move to digital channels – a shift that may have had an adverse effect on the relationships that banks have with their customers.

When cities eventually lifted restrictions, banks had to make decisions around the reopening of their branches in line with new safety guidelines and changing consumer behaviors and concerns.

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“There’s a real decision to be made for these organizations about what’s the right balance for in-person versus digital [services],” explains Andrew Aho, regional director of data platforms at InterSystems, a hybrid cloud and on-premise data platform. In his view, many companies run the risk of making poor decisions because they don’t have enough data to go on.

“You might prematurely close down some of these channels or not fully resource and invest in the ones that people are moving to,” he says.

The value of data

While financial services firms are aware of the value of utilizing data to enable them to make better decisions, they still face significant challenges in doing so effectively.

According to Michael Hom, InterSystems’ head of financial solutions, these hindrances can be broken down into three key areas: access, accuracy, and security.

Most financial services businesses have huge amounts of data on their customers, ranging from spending habits to credit histories. However, this information is often stored in silos, making it difficult for employees to access comprehensive datasets that can enable better decision-making.

“[These institutions] have rich resources captured in various systems, including legacy and contemporary ones,” says Hom. “Getting access and making the data available for analytical or alternative use has been difficult.”

And it’s not just the big banks and legacy financial institutions that are facing these headwinds. Even newer fintech companies have difficulty leveraging the vast amounts of data at their disposal.

“With some of the smaller, more agile, or newer firms, the question is less about getting the information into people’s hands and it’s more about whether they are doing anything useful with it,” says Aho. “it becomes an issue of data literacy in the context of the business decision that needs to be made and avoiding poor execution due to decision bias or analysis paralysis.”

Putting it all together

There are various data management tools and strategies on the market that aim to help financial services firms manage their data effectively. Many of these companies use data warehouses, which are central repositories of data that have been optimized for specific purposes. Others may rely on data lakes, where information is stored in its raw form and accessed when needed.

However, there are issues with these methods. Data warehouses are often designed for specific situations, which makes it challenging when information is needed to make decisions outside of that defined scope. Data lakes, on the other hand, run the risk of becoming data swamps if they aren’t managed properly.

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For firms that have been in the business for a while, the prospect of having to rework their entire data management systems is also daunting – attempting to migrate years, if not decades, worth of customer data to a new platform would require significant amounts of time, effort, and money.

That’s where data fabrics come in.

Much like the name implies, a data fabric “covers” all the different sources of data within a company. It ensures that all end points and distributed services speak to each other and communicate effectively by simplifying and integrating data management across cloud and on-premises platforms.

“A data fabric allows firms to stitch together data from the different applications and data sources across the enterprise,” explains Aho.

InterSystems’ own data platform, Intersystems IRIS (short for “intuitive, reliable, interoperable, and scalable”) offers a data fabric to enable companies to use their information more effectively without needing to completely overhaul their existing processes and methods. Intersystems IRIS ties together the different sources of data that a company may have and is able to pull information from these varying sources as required, making use of machine learning and AI to provide real-time analysis and insights.

In this way, data fabrics empower companies to make the most of the data they have on hand without needing to redo their existing systems. InterSystems’ platform can also be connected with other data tools such as data visualization software to better empower employees to do their work more efficiently.

Getting personal

Data fabrics – and their benefits – will be even more important in light of the changes that are shaking up the financial services sector.

One rising trend is the broader push toward personalized services, which has only highlighted the value of being able to access data and use it to deliver better customer experiences. According to McKinsey & Company, 60% of banking customers in emerging Asia would be glad to share their data with banks if it meant they’d receive customized services.

“Most customers would welcome more data-centric and personalized financial services, with more custom advisory and execution capabilities,” says Hom. “A focus on ease of use, convenience, relevancy, value, and trust will create “stickiness,” drawing and keeping customers with the firms.”

For example, if a company notices that a customer has been hitting their credit limit several months consecutively or has been making payments late, that could be an indicator that the customer is in some kind of financial trouble. The firm can then offer targeted support to help that person through whatever it is they’re facing.

“Banks have the opportunity to really improve on customer experience within the bounds of offering advice,” says Aho. “And consumers are beginning to expect a service that is personalized to their circumstances – a market segment of one.”

And as the new features of financial services firms become the de facto standards of tomorrow, the ability to leverage data effectively will be vital in ensuring that companies stay ahead of the curve and innovate to give customers the best experiences.

InterSystems is a hybrid cloud and on-premise data platform that provides high-performance database management, interoperability, and analytics capabilities.

Learn more about the challenges faced by businesses in the financial services world and how data fabrics can make a difference by reading its overview here.

This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.