Bryan Yurcan and Jonathan Camhi also contributed to this report.
Banks have long been built and powered by massive amounts of data. But in this era of big data, banks are facing several issues that hinder their ability to fully maximize all of the valuable information they possess and can access from social media, the Web and other third-party sources.
For one thing, legacy data storage systems are growing increasingly inefficient and even obsolete. Banks also now recognize the need for quick access to centralized data, which can be a difficult task as many financial services firms have data stored in siloed and disparate locations. Another challenge is a shortage of professionals with the sophisticated analytics skills needed to harness big data.
But many banks, technology companies, and even municipalities and universities are working on solutions to effectively tackle big data. While we acknowledge that there are many companies doing good and innovative work in this space, in this special report Bank Systems & Technology highlights seven organizations that are clearly at the forefront of big data innovation.
Great Western Bank
Analytics Finds The Right Customers
Great Western Bank has grown significantly over the past few years given the difficult banking environment of the post-financial crisis world. The bank has grown more than 300% since 2008 to become a $9 billion-asset institution. But growth has brought on new challenges, says Ron Van Zanten (pictured at right), the bank's VP of data quality. "Using big data is going to be the No. 1 enabler to allow us to continue to grow. We aren't a community bank anymore. We can't keep doing things like a small bank, using spreadsheets and doing things manually."
To continue growing, the Sioux Falls, S.D., bank is using big data tools from Microsoft to target more profitable customers in its marketing campaigns. The bank used to send out promotional mailings offering customers rewards for opening new checking accounts. Customers would make an opening deposit on the account and then the account would stay dormant. That meant Great Western Bank would lose money on those accounts, Van Zanten says.
To reverse this trend, Great Western now is targeting customers who are likely to add services such as ACH payments, debit cards or overdraft protection to their checking accounts. "It takes analytics to find that customer," Van Zanten says. "We want people to use services that add value. Then we can take their activities on their debit card, see what they're interested in and offer a product suite to fit their lifestyle."
With fewer customers visiting branches, the bank's staff doesn't have the one-on-one time to develop an understanding of what the customer wants, Van Zanten says. "Here is a new paradigm shift. You don't get to meet with the customer in the branch. You need a different channel to understand the customer. Big data is the most efficient way to do that. Otherwise you're flying blind out there," he says.
Great Western already has seen improved returns on its mailing campaigns using analytics-driven marketing, Van Zanten reports, although the bank wants to gather more data before it releases numbers concerning those returns. The next step in Great Western's big data strategy is to incorporate and analyze data from social media to help draw in younger customers, Van Zanten says. Those customers are easier to attract than older ones, he says. "We want to catch people in their 20s before they get a car loan and a home equity loan. It's very difficult to displace a well-financed customer." -- Jonathan Camhi
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio