The Vast, Unstructred Data Universe
According to Framingham, Mass.-based IDC Financial Insights, the overall volume of digital content will increase 48 percent this year from 2011. More than 90 percent of this information will be unstructured -- such as images, videos, MP3 files and information on social media sites. This data will be full of rich information, IDC says, but challenging to understand and analyze.
As such, IDC expects to see an increased number of offerings that more closely integrate data and analytics technologies, such as in-memory databases and business intelligence tools, move into the mainstream market. But this digital content will only add to the massive data pile most banks already deal with, notes David Potterton, VP of global research for IDC.
"There's a data explosion," he says. "Unstructured data, like social media, is going through the roof." According to Potterton, banks need to figure out how to effectively store and mine this unstructured data, as this kind of data will soon be a primary way to glean an accurate profile of customers.
SAS's Wallace adds that many consumers interact entirely with their banks via digital channels, so the old data models will have to be reinvented. He says small community banks and credit unions in particular will have the hardest time adjusting to this, as those institutions traditionally have had more personal, face-to-face interactions with their customers. "The challenge for them will be to deliver that same level of customer experience in an environment where you aren't talking to the customer across the table or counter anymore," Wallace explains.
Wallace notes that smaller institutions also may lack the infrastructure to store and analyze big data. As a result, he says, it often is more cost-efficient for those institutions to use solutions on a software-as-a-service basis to help process and analyze their data. "We have seen an increase in the hosted delivery of these kinds of solutions for smaller institutions," Wallace relates.
Ultimately, says RBS Citizens' Gifas, effective management and mining of big data is essential for banks to provide an optimal customer experience and engage and retain consumers. "In today's economic environment, customers are looking to be efficient and nimble and do more with less," he says. "The better information we can provide them, in a usable form, the more we can contribute to their efficiency and, in return, the more loyal they will be to us as their banker."
[For more on data management, see related article.]