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Customer insights is the new currency for banks

Connie Leung, Senior Financial Services Industry Director, Asia, Microsoft | Dec. 16, 2014
Connie Leung of Microsoft discusses how a highly regulatory environment coupled with increasing competition is pushing banks to grow deposits and revenue streams by leveraging customer insights.

It is an unprecedented time in the industry with extremely high regulatory scrutiny of banks and capital markets firms, coupled with an acute need to grow deposits and revenue streams in the light of increasing diverse competition. To address these challenges, two key roles in financial institutions have risen to the forefront of business strategy: the Chief Risk Office, and the Chief Marketing Office. Although facing such different priorities, these two executive offices do have something in common as they transform the business: data analytics.

Today's financial institutions are seeing the use of data as a new form of currency. Combining current, more traditional data with less traditional, unstructured data streams, and feeding them into an analytics solution, can help CMOs interpret the life of the customer, how they use your product and where there's an opportunity to meet an unmet need. There tremendous customer insights are critical for financial institutions to gain customers wallet share and stay ahead of the competition.

Regulations such as Basel III and the U.S. Foreign Account Tax Compliance Act (FATCA) are having a profound effect on the business models of financial institutions in Asia even though the region faces less regulatory pressure than in the U.S. or Europe - KPMG reported last year that Basel rules and FATCA top the list of banks' worries in Asia[1].

Therefore, regulatory compliance and risk management remain top priorities for banks as they look to navigate in the "new normal".  The economic crisis of 2008 highlighted the importance of counterparty measures that could help mitigate the potentially far-reaching impact of economic risks,such as a fiscal or liquidity crisis, which is still one of 10 risks considered of "highest concern" in the World Economic Forum Global Risks Report for 2014[2].

While regulations are often perceived as an impediment to innovation and growth, a Microsoft customer, Maybank, the largest bank in Malaysia, has shown that adherence to compliance can enable the bank to mitigate risk, enhance bargaining leverage, improve cash flow, raise employee productivity and gain supplier visibility but also keep pace with changes in the business as well as the regulatory climate. The implementation of a contract management tool to improve supplier relationships and automate management of contracts with the necessary controls to mitigate risks and drive compliance was named the winner of the Reporting and Compliance Implementation Award (Risk Technology Implementation) for 2013 by the Asian Banker.

In the recent Celent report on "How Big is Big Data"[3], 95% of banks responded that risk management is top of mind followed by both marketing and customer experience with 75%. Microsoft believesthe industry is ripe with opportunity, but it falls to risk managers to take a balanced approach inmitigating risk, while allowing for continued business growth.

 

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