MUMBAI:
Across the globe, companies are amassing volumes of data with the intent of optimizing performance, identifying trends and meeting rising consumer expectations.
Yet nearly 75% of global financial services and insurance executives admit they are challenged by the fractured nature and vast amount of data available, citing rich analytics capabilities as difficult to achieve. In India, this challenge is even greater with 86% of executives admitting they are challenged by the immense data they have.
Even with these challenges, a new Aite Group global study commissioned by TransUnion (NYSE: TRU) found that executives in the financial services and insurance industries globally plan on continuing to secure more data sources. Furthermore, they look to incorporate more artificial intelligence (AI) and machine learning (ML) technology into their analytic platforms to help them make sense of the information.
The global study explored the existing analytical processes, tools, data sources and operational effectiveness of analytics solutions used by the financial services and insurance industries. The quantitative online survey recorded the feedback of 682 marketing and risk executives at financial institutions located in India, UK, U.S., Hong Kong and Canada, many of whom do business across the globe.
The study found that the proliferation of AI/ML is expected to continue over the next 24 months with three in four global executives considering integrating new analytic technology into their platforms. There’s good reason for this implementation as AI and ML can shorten the traditional analytic lifecycle from months to just weeks or even days.
“Businesses are reevaluating their technology investments, and looking to implement artificial intelligence, machine learning and alternative data models and sources,” said Harshala Chandorkar, COO at TransUnion CIBIL. “Their end game is to gain deeper analytics and competitive insights that better allow them to mitigate risk and meet consumer needs. Ultimately, the companies that best leverage these data and analytical technologies will provide consumers with the best experiences, resulting in more revenue.”
Despite Challenges Surrounding Analytic Capabilities, Data Sources are Expected to Grow
Financial institutions have placed an increasing amount of influence on the value of expanding data sources. The desire to invest in data includes new sources such as non-traditional, third-party and alternative data among the banking and insurance communities. Over the next 24 months, almost all (99%) of institutions in India have plans to use alternative data – notably higher than the global percentage of 89%.
More than half of global respondents plan to increase spending on most types of data sources with 65% intending to increase spending on newer forms of data such as mobile information about web browsing and app usage. In India, this percentage was even greater at 76%. In addition, 59% of executives in India indicated that integration of new data sources will be very important to their business strategies, yet the lack of the right tools continues to pose an issue as only 32% of firms in India can integrate new data sources across all their analytic solutions.
The survey also found that in India, 85% of marketing executives and 92% of risk executives expect their overall budget for data analytics to increase year-over-year. This was higher than the global average of 78% and 70%, respectively. This points to a significant investment in expanding the amount of data available despite ongoing challenges such as data cleansing and preparation, which 87% of India respondents said can be challenging, compared to 76% globally. This is in addition to the larger operational issues such as cumbersome technology and
the talent deficit.
Explaining the need to drive alternate data reporting in India, Harshala Chandorkar added, “While businesses upscale their investment and expertise in alternative data analytics, it is essential to drive inclusion of alternative data in the ambit of credit bureau coverage in India to include larger sections of society who may not have a footprint in the formal credit sector. Alternative payment data such as records of payment on electric, telecommunications and other recurring obligations can serve to help evaluate the risk to those potential borrowers that are outside the credit mainstream. Inclusion of alternative data in mainstream credit information databases will help drive ease of doing business as well as financial inclusion in India”
Help Wanted: Talent and Technology to Enhance Analytic Capabilities
To stay competitive in a data-rich world, companies need access to cutting-edge analytic solutions and data science expertise. However, the study found that inflexible legacy technology, talent shortages and regulatory barriers are among the factors that prevent businesses from harnessing the power of analytics with speed and ease.
“Most financial institutions lack a single, cohesive analytics platform,” said Tiffani Montez, senior analyst at Aite Group. “Firms may have vastly different data repositories and teams managing analytics functions, often leading to multiple approaches – by line of business, role and channel – across their institutions. To address these issues, many financial institutions are looking to centralize their data into a single platform that can quickly support change and integrate new data models.”
Enhancing analytic capabilities through AI/ML technology is a top priority globally, but with distinct differences across geographies. Specifically, 14% of global executives – and a similar number (13%) of executives in India indicated they currently do not have any solutions that can implement AI/ML into analytical models. Additionally, 78% of India respondents also believe this technology is a major competitive differentiator, compared to the global 66%.
The data scientist talent shortage is another pressing issue contributing to the global insights gap. As the volume of data has increased, the need for data science and analytics professionals has increased exponentially. Globally, 86% of respondents noted there are challenges with accessing the right data science and analytics talent, compared to 97% of executives in India.
To enable purposeful insights development, it is crucial for companies to streamline their processes and have closer alignment between the technical tools that are readily available and talent with specialized knowledge of turning data into insights. In the report, financial institutions noted they are increasing their investments in both talent and in analytics technology – but these firms are also greatly increasing their investments into another resource, more data.
