More than ever, our lives are moving at digital speed, and the landscape around us seems to be accelerating. To find our equilibrium, we have all had to pivot away from traditional ways of going about our lives to a new world of embracing pervasive technology. COVID-19 has catapulted big data and analytics to the forefront of all organizations.
Along with all other financial services sectors, understanding how to effectively leverage data to remain competitive is imperative for payments players. Many believe that fintech start-ups are threatening traditional payments players’ very existence. However, the real threat really comes from “Big Tech.”
Big Tech, such as Amazon and Facebook, are rapidly encroaching on payments players. How? It’s in the data – particularly payments data – and how they draw insights from it. With such a trove of data, these companies are integrating into every part of our lives and capitalizing on every aspect of real-time data insights. And now, they’re becoming the “go-to” payments providers for many of us.
Big Tech companies understand how to remove friction from the customer journey to drive transactions and introduce new payment services and products on their platforms. For example, the Apple and Amazon Prime credit cards can be opened within seconds and instantly usable within your mobile wallet. And Google is partnering with half a dozen banks to offer Google Pay users in the U.S.digital checking and savings accounts.
Meanwhile, traditional payments players often lag in embracing data innovation. With so many new competitive platforms and tools to accelerate digital transformation and adoption, if they aren’t forging ahead, they are falling behind – quickly. According to DisruptionHub, Big Tech is creating Trojan Horses in partnership with banks to continue to absorb as much data as possible. Big Tech generally employs a platform strategy, and banks can build on this strategy withbanking APIs, as Alibaba and Tencent have done in China.
But how can legacy financial services companies orchestrate, analyze and utilize big data to better hone in on the customer journey?
Big Data’s Role in Financial Services
From increased fraud potential to a surge in online demand, COVID-19 has disrupted the financial services industry around the world. Big Data’s role in the fight has never been more important. While there are innumerable ways financial services organizations can better leverage big data, here are a few important steps to consider:
- First, understand that access to all of the data is key. Insights are only as powerful as the data itself. To compete, payments players need to leverage all the data, particularly payments data, across organizational silos. Deploying seamless data integration to monetize opportunities is imperative.
- Second, when it comes to data analytics, know that not every solution will scale. The technology you choose to leverage your data is an important decision and can be a difficult one. It’s important to choose one that will scale to hundreds of millions of accounts, and has a straightforward architecture and implementation that will speed value realization.
- Third, have an end goal in sight. It may take some time to get to that goal, but you can start off strong by asking the right questions right away. For example, how does your organization want to leverage the data for growth among existing customers? Or, to remain relevant in the evolving payments ecosystem?
The Window of Opportunity
Big Tech has already figured out how to utilize big data. Though it’s rapidly gaining momentum with traditional financial institutions – driven by the fallout caused by COVID-19 – big data, when integrated, orchestrated and analyzed, has untapped potential across many use cases in the payments industry. There is a window of opportunity for payments players to rise to the challenge and look to the example of Big Tech to shape their own data strategies. Staying relevant means better leveraging data, changing mindsets and accelerating digital transformation efforts to better meet consumers’ needs.
Realizing the value of payments data fuels our ability to drive customer value, leverage data gravity and create a virtuous circle in the emerging digital payment ecosystem. Boldly using big data and then acting on data-driven insights is the key. Prioritizing data and making it an asset is where payments players will prevail.
Lawrence Latvala also helped contribute to this article. Latvala is the Americas Financial Services Industry Consulting Practice Leader for Teradata. Deborah Baxley is the Americas Digital Payments Industry Consultant for Teradata.