Bank data—Untapped high return asset or a junk bond?
March 15, 2018
March 15, 2018
Banks must find new sources of revenue to mitigate the pressure on traditional margins. Many are looking at their data as a potentially rich new seam of value. It’s easy to see why.
Globally, banks are considering the risks and threats to new revenue. Despite the risks and their associated implications, the data commercialisation opportunity, if executed carefully, remains strong. Global examples of cross industry players indicate that banks could expect a minimum uplift in existing revenue of 1-2% cross three external monetisation business models.
The real value and potential for banks is much more likely to be found in using their data to help others create highly targeted, relevant and timely marketing offers.
Banks’ data, at face value, is worth little. As a raw, unprocessed commodity, it’s likely to be as lucrative as a seam of coal left in the ground. And that’s effectively, where most data is.
There’s no doubt that banks’ data can be used to generate valuable insights. But banks should be wary of looking at the valuations and revenues of the technology giants as an example and inspiration.
There’s no reason to believe banks cannot become effective insight providers. Of course, customers will pay for insights, however banks need to question whether they are best suited to play in a space already hotly contested by other, well-established providers.
Starting small and making the complex simple through targeted action is the key to beginning to realise new revenue at pace. Three key actions to get started:
The real value for banks is around using their data to help others create highly targeted, relevant and timely marketing offers.