IHS Markit crunched some data and found the average age of a vehicle in the US has climbed to 11.6Ys - a record high. Meanwhile, Experian crunched other data and found auto loans now average 5.5Ys in length. When it comes to crunching data, it is clear that handling big data is now big business.
This sort of analysis is being used for everything from marketing to regulatory compliance to reducing risk and organizational efficiency. Yet, oftentimes big data sits unused in old digital drawers. Many community banks collect this data, but many may not bother or even know how to integrate it. Leveraging existing data could allow community banks to attract and keep more customers, more easily provide compliance reporting and cut costs from streamlined work processes.
It has been reported that by 2020, the world's computers will most likely hold up to 35 zettabytes of data (one zettabyte = one billion terabytes). That is a lot of data! The challenge with all this data is not so much gathering it as analyzing.
To stay competitive, banks should explore ways to tap into data systems, while boosting analytics. The good news for community banks is that data systems are likely not as complex as those of the big banks.
To get started leveraging your data, define what information is needed, how often it is needed and how it is secured. Then start developing a data governance plan to provide all stakeholders in the bank with a guide for data management. Reaching out to the various levels within the bank will help determine the flow of data and how connections can be made for example between transactions and emails, or other unstructured data.
One area that leverages your data mining and provides you with even more data is online advertising. With online ad data, a community bank is in a good position to create profiles of potential customers who respond positively to an ad. Community banks can improve the marketing message and even personalize it. Financial digital ads are blossoming as a result. According to eMarketer, financial institution spending on the web almost doubled from 2011 to 2015 to a remarkable $7.3B.
With a bit of work and thought, community banks can leverage big data as an effective tool to keep existing customers and attract new ones. It might also help improve regulatory compliance. In the past, different teams (such as BSA, AML and others), may have been focused on different missions so data was not leveraged. Today, advanced analytics can pull together data from different sources and management can act upon it.
As technology innovation and regulatory demands continue to increase, community bankers have an expanded need for big data and analytics. By looking at ways to harness the power of big data and leverage your existing systems, your teams will be better positioned to react and pro-act around such critically important issues as customer acquisition, retention, regulatory compliance and operational efficiency.
No matter where you are driving your bank car in 2017, capturing big data around the bank and then beginning to leverage it in the coming year will undoubtedly be beneficial.