Today, financial services firms are operating in a highly complex and rapidly changing business environment. Increasing competition as new, diverse companies continue to emerge; more demanding clients who want relevant real-time information to enable better business decisions; and new channels for communicating and delivering products and services are all current demands being placed on the financial services community.
Expanded global presence, new products and services, and advances in technology are just a few of the strategies that firms are developing to keep pace in this competitive landscape. At the same time, we are observing two key trends becoming prevalent throughout the financial services industry:
* Firms are moving away from mergers, consolidation and non-financial services diversification strategies. These companies are, instead, focusing on the expansion of products and services, most notably within the capital markets, investment banking, and retail investment areas.* Companies are viewing information as both an important corporate asset and competitive weapon.
These trends have caused an increase in demand for advanced business intelligence and analytic solutions to support strategic decision-making as well as day-to-day operations. Leading banks and other financial services organizations are realizing that they are operating in an "Information Economy."
In order to lead and succeed in this "Information Economy," financial services organizations today understand the importance of having ready access to timely, accurate, consistent information across their entire value chain. This includes data stored in customer relationship management, human resources, financial management, supply chain, e-business and enterprise resource planning systems. This information is further enhanced with advanced analytic applications that offer insight into a business and its processes, allowing financial services firms to react quickly to a rapidly changing business environment.
In the financial services industry, there are five key analytic segments. Each of these, though focused on a specific analytic area, must integrate with the others to maximize its value:
Financial Analytics: Performance measurement at multiple levels containing multi-dimensional views. Customer Analytics: Customer behavior and information on both current and future events. Workforce or Human Resources (HR) Analytics: Information on employee recruiting, development and performance. Strategic Sourcing: The enterprise-wide visibility necessary to lower spending and improve supplier performance. Balanced Scorecard: The metrics that align strategy to operational events and performance measurement.
Recognizing the opportunity for more sophisticated and timely analytics, financial services firms must know how to invest intelligently to build their analytic capability.
As such, based on our experience in having designed successful analytic solutions for numerous financial services clients, we offer the following guiding principles:
Use an iterative approach - Attempting to address the comprehensive analytic information requirements for the entire organization at one time is too daunting a task. Therefore, the work should be divided into manageable work streams, starting with an area that provides significant value to the business. Assess enterprise data architecture - Once the individual requirements are understood, the organization should assess and establish an enterprise data architecture strategy. The strategy inherently differentiates the value and characteristics of analytic information from On-line Transaction Processing (OLTP) data. Display a "top-down"/ "bottom-up" strategy - To manage risk and realize early benefits, successful organizations will invest gradually, building momentum and support for the modern analytics environment, and they will do so in a manner that is consistent with the enterprise strategy. Establish strict control points for shared data - Perhaps the most difficult task, strict controls must be enacted from the outset to ensure that appropriate and consistent organizational responsibilities, processes, standards, and infrastructure are in place throughout the implementation program.
The ability to capture, integrate, analyze and deliver information will be the single biggest differentiator for financial services firms during the next decade. Thus, financial services organizations that develop and execute a long-term strategy for integrating and delivering the inherent power of information will experience the rewards of high growth, profitable customer relationships, efficient operations, optimal returns on capital and minimized risk.
Financial services organizations must effectively leverage information to better understand and improve relationships with their current and prospective customers, suppliers and employees in order to excel in today's information-driven environment.
Michael J. Schroeck is a partner and the global leader of PwC Consulting's iAnalytics solution set and an early pioneer of integrated analytics and data warehousing solutions.
Henry Schweppe is a partner and the Banking Industry leader of PwC Consulting's iAnalytics solution set and specializes in financial analytics within the financial services industry.