Executives Crave More Data
Across the globe, companies are amassing volumes of data with the intent of optimizing performance, identifying trends and meeting rising consumer expectations. Yet nearly 75% of global financial services and insurance executives admit they are challenged by the fractured nature and vast amount of data available, citing rich analytics capabilities as difficult to achieve. In Canada, 65% of executives admit they are challenged by the immense data they have.
With these challenges in mind, a new Aite Group study commissioned by TransUnion found that executives in the financial services and insurance industries plan on continuing to secure more data sources. Furthermore, they look to incorporate more artificial intelligence (AI) and machine learning (ML) technology into their analytic platforms to help them make sense of the information.
The global study explored the existing analytical processes, tools, data sources and operational effectiveness of analytics solutions used by the financial services and insurance industries. The quantitative online survey recorded the feedback of 682 marketing and risk executives at financial institutions located in Canada, the U.S., the U.K., Hong Kong, and India, many of whom do business across the globe.
The study found that the proliferation of AI/ML is expected to continue over the next 24 months with three in four global executives (74% in Canada) considering integrating new analytic technology into their platforms. There’s good reason for this implementation as AI and ML can shorten the traditional analytic lifecycle from months to just weeks or even days.
“Businesses know that rich analytics capabilities are critical to remain competitive in today’s reality. While Canadian executives may feel challenged by the immense amount of data they already have access to, they plan to continue investing in new and expanded data sources to enable them to better mitigate risk – and meet constantly shifting consumer expectations, said Glenn Waine, Senior Director, Data Science, Data Strategy and Consulting at TransUnion Canada. “But what is key is having the right technology and talent in place to harness the true value and deep insights this data can provide. This means businesses need to reevaluate their technology and talent investments, including exploring implementing artificial intelligence, machine learning and alternative data models and sources. Ultimately, the companies that best leverage these data and analytical capabilities will provide consumers with the best experiences, directly impacting the bottom-line.”
To stay competitive in a data-rich world, companies need access to cutting-edge analytic solutions and data science expertise. However, the study found that inflexible legacy technology, talent shortages and regulatory barriers are among the factors that prevent businesses from harnessing the power of analytics with speed and ease.
“Most financial institutions lack a single, cohesive analytics platform,” said Tiffani Montez, senior analyst at Aite Group. “Firms may have vastly different data repositories and teams managing analytics functions, often leading to multiple approaches – by line of business, role and channel – across their institutions. To address these issues, many financial institutions are looking to centralize their data into a single platform that can quickly support change and integrate new data models.”
Enhancing analytic capabilities through AI/ML technology is a top priority globally, but with distinct differences across geographies. Specifically, 14% of global executives indicate they currently do not have any solutions that can implement AI/ML into analytical models, with Canada less so at 7%. This may point to the fact that only 58% of Canadian respondents believe this technology is a competitive differentiator, compared to the global 66%.
The data scientist talent shortage is another pressing issue contributing to the global insights gap. As the volume of data has increased, the need for data science and analytics professionals has increased exponentially. Globally, 86% of respondents noted there are challenges with accessing the right data science and analytics talent, compared to 82% of executives in Canada.
|Region||Percent of Respondents Stating that the Finding Data Science Talent is a Challenge||Percent of Respondents Stating that AI/ML is a Competitive Differentiator||Percent of Respondents Stating that they have no AI/ML
To enable purposeful insights development, it is crucial for companies to streamline their processes and have closer alignment between the technical tools that are readily available and talent with specialized knowledge of turning data into insights. In the report, financial institutions noted they are increasing their investments in both talent and in analytics technology – but these firms are also greatly increasing their investments into another resource, more data.
Data Sources Growing
Financial institutions have placed an increasing amount of influence on the value of expanding data sources. The desire to invest in data includes new sources such as non-traditional, third-party and alternative data among the banking and insurance communities. Over the next 24 months, 87% of institutions in Canada have plans to use alternative data (see table below) – nearly on par with the percentage across the globe (89%).
More than half of global respondents plan to increase spending on most types of data sources with 65% intending to increase spending on newer forms of data such as mobile information about web browsing and app usage. In Canada, this percentage was nearly the same at 63%. In addition, 76% of Canadian executives indicated that the integration of new data sources will be very important or important to their business strategies. Yet the lack of the right tools continues to pose an issue as only 20% of Canadian firms can integrate new data sources across all of their analytic solutions.
Alternative Data Sources
|Alternative Data Source||Investment Increase of More than 15%||Investment Increase of 5% to 15%||Investment Increase of Less than 5%|
|Mobile Data (browsing, app usage, etc.)||17%||29%||17%|
|Purchase (Spending) Data||9%||31%||11%|
|Social Media Data||10%||22%||25%|
|Transactional or Bank Account Data||9%||20%||22%|
*The Aite Group Global Survey of Marketing and Risk Executives was conducted in Q3 2019.
The survey also found that in Canada, 77% of marketing executives and 59% of risk executives expect their overall budget for data analytics to increase year-over-year. This was slightly lower than the global average of 78% and 70% respectively, yet still points to a significant investment in expanding the amount of data available despite ongoing challenges such as data cleansing and preparation, which 67% of Canadian respondents said can be challenging. Global executives found this increasingly challenging at 76%. However, this is in addition to the larger operational issues such as cumbersome technology and the talent deficit.
“Businesses have access to more extensive data than ever before, which can provide a huge opportunity to get closer to their customers, mitigate risk, and help guide business strategy overall,” added Waine. “But for many businesses, they don’t currently have the optimal tools, technology, infrastructure and talent in place to best harness the true value of this data. Moving forward, it’s clear that investing in more sophisticated data analytics resources is a top propriety for marketing and risk executives across Canada to ensure they stay competitive in a data-rich world.”
To learn more about the state of analytics in the financial services and insurance industries, access the full Aite Group and TransUnion report, Current State Assessment: Global Analytics Ecosystem.