This article will delve into the business challenges and processes of strategic importance in an executive decision plan for the financial services sector and will discuss the data analytics related to those processes in an integrated fashion to ensure better decisioning.

 

A challenging business environment, more red tape around risk and compliance, the growing importance of strong governance structure, more demanding customers and maintaining efficiency and productivity are some top-of-mind headaches for executives in the financial services industry. For better decision-making, data analysis is a prerequisite. Data analytics should have historic views, but also should include predictive analytics. In this article, I attempt to clarify the process analytics that are of extreme importance to executives, which should be presented in an integrated manner.

 

In a globally distributed business scenario, financial services executives currently have internally and externally challenges; both are of equal importance to the overall solidity of the organization. Internally, the governance, risk and compliance (GRC) issue is of prime importance to the business and its industry reputation. Externally, customer-focused processes will be the number one priority area for CXOs’ observations. The crux of the analysis should be to understand why these processes should be observed and analyzed in an integrated manner, rather than taking a siloed approach. I will now briefly look at those processes.

 

Customer Service

 

Globalization, fierce competition and technological innovation are some of the factors that have made customer servicing of prime importance. Today’s customer is more informed, risk savvy, more demanding and expects better return with top-class service. To satisfy the new brigade of clients, service providers should not only have good existing relations, but they also should have amenities, insight, predictability and infrastructure to improve them. There should be data analysis in place for customer expectations, existing relations, history, market offerings, risk and, the biggest one, customer relationship management.

 

Governance, Risk and Compliance (GRC)

 

SOX demands more executive oversight of internal controls, risk assessment and management and regulatory compliance. This has given rise to top management prioritizing these processes to be streamlined. GRC analytics are strategic in nature, and key long-term decisions will always be guided by the GRC health report of the organization. This is of paramount significance because financial services will always be under regulatory observation to gauge their behavior internally and externally in market. The enterprise GRC matters more than a segregated view.

 

Product/Service Innovation

 

Innovation is key in the financial services business, especially when organizational reach spreads to geographies. Globalization and surges in emerging markets have produced more demanding customers who are no longer happy with run-of-the-mill offerings and search for service providers who can provide more customized products. In this highly complex environment, it is important for organizations to keep tabs on existing product/service status, customer expectations and churn. A detailed and data intensive analysis of market offerings is critical for organizational growth and executive decision-making.

 

Technology Pervasiveness and Outcome

 

Technology is the differentiator in every business decision in the financial services industry. Greater process automation has assisted in reaching a larger customer base and also improving the service availability. This large-scale dependency on technology in each process has resulted in massive IT budget allocation and subsequent challenges to administer the IT governance. The turning point is to analyze the return on these IT investments in business lines, products/services, compliance/risk, data management, etc. Executive knowledge of these parameters is necessary, considering the burgeoning IT investment and in defining the future technology roadmap.

 

If you closely observe the above parameters, each is addressing an ingredient of strategic importance, greater shareholder value creation and enhanced investor confidence. That’s where the decision-maker would be keen to have parameters analyzed cohesively in an integrated manner. Subsequent sections will delve further into their interdependencies during strategic decision-making and the need for an “integrated data analytics” structure for them.

 

Why Integrated Data Analytics?

 

Before I reason out the interdependencies between the four mentioned processes, each one needs to be detailed for better comprehension. The diagram in Figure 1 will help illustrate the nuances of each one.


Though Figure 1 depicts each individual process in detail, there is a deep dependency between them, which I will now explore.

 

 

Client service: Understanding changing consumer behavior, reinventing offerings and finding possibilities of cross-sell/up-sell are some the ingredients necessary to create a better customer service experience. However, we also need to acknowledge the impact of better governance structure on any organization, the suppleness of its product/service innovation and its appetite to improve the service with greater automation. Clients do closely observe these factors when they decide on any relation with an organization.

 

Governance structure, compliance and risk management: Strong corporate governance in association with excellent risk management and compliance culture is a must for any organization to uphold market credibility, investor confidence and for establishing sound business ethics. This definitely makes a case for granular GRC analytics. GRC process links to each organizational entity; however, the processes which strongly influence the GRC are three important ingredients in the financial services world.

 

  • When you set governance structure, script the internal regulations or comply with external regulations while building a strong risk environment, it must have a strong customer focus in the background.
  • The GRC framework should also have space for greater product/service innovation and should be aligned to changing market dynamics and trends.
  • Process innovation with the introduction of technology is the “in” thing in the financial services industry. This also brings the focus of IT GRC in line with organizational GRC.

Product/service innovation and market dynamics: To compete in this ever changing marketplace under evolving customer expectations, it is imperative that the organization should have the infrastructure to understand the need for innovation with respect to customer expectations, competitive trends and the GRC framework.

 

Technology use and its effectiveness:Whether to provide better service experience to clients across geographies or to re-energize the operational processes, technology intrusion has become inevitable. For a business empire spanning geographies, the use of IT to entangle the segregated pieces of organizational governance with holistic risk and compliance management is never more appreciated than under current marketing and trade constraints feeling the glare of a segregated market structure. IT has truly become the backbone and differentiator when we speak about customer service excellence and service innovation under stiff organizational and regulatory discipline. However, to unleash the true potential of technology on business, a dispassionate view of its monetary effectiveness is necessary. While doing so, one should not take a compartmentalized view of IT investment; rather, view its value creation under surging customer service excellence, service innovation and GRC effectiveness.

 

It is understood by now that a greater amount of synergy is required between these parameters to achieve effective decision-making on issues that impact strategic step execution and directly affect the organization’s market standing, reputation and stakeholder confidence. That makes a strong case for an integrated infrastructure, which presents the analytical attributes of the above processes in a cohesive fashion for tangible use at the executive level.

 

 

In order to build a solid foundation for a strategic decision-making process, it is important that the financial services business appreciates these processes, visualizes their interrelated significance and presents them to decision-makers, as depicted in Figure 2. While doing so, there are some challenges to be expected, but those are welcome if we analyze the long-term dividends to the organization.

 

Challenges

 

  • Data integration: Amalgamation of quality data across the organization to produce excellent analytics for the mentioned processes.
  • Standardization of data: Different business lines could have varied expectations on same process attributes. Bringing them all to a consensus would be important.
  • Analytics model: In order to bring predictive analytics to certain processes, a robust and industry-accepted model should be in place, and the organization needs to invest resources to bring those to the fore-front.
  • Program management: For disciplined implementation of this program, it is expected that a global program management system be in place, and that it should be active from initiation of engagement until the infrastructure is in a steady state. This is extremely challenging, and equal representation from business and technology in the program management office is required to make this a success.
  • Executive sponsorship: For the overall success of this program, executive and board-level sponsorship will boost the importance and priority of execution.

Productive business decisions are key, and they have to be based on sound logic and intensive data analysis. Decision-making in a time of fierce competition during adverse global market conditions when regulatory surveillance is swarming each corner of business processes is going to be tough and will experience greater internal and external scrutiny. In such a hostile and challenging environment, the right data and its analytics are essential for productive, transparent and fool-proof governance. Thus, integrated data analytics for financial services is a business case worth appreciating. It is expected that organizations will keep long-term dividends under consideration while evaluating the objectives behind this case.

Register or login for access to this item and much more

All Information Management content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access