The data conundrum for the finance industry
In today's digital age, financial institutions and fintech companies are constantly seeking ways to use data to provide more personalised and hyper-relevant products and services.
Product usage data provides valuable insights into the behaviours, preferences, and needs of users, which can help the financial services industry to develop and deliver these tailored financial products and services. However, the use of in-product data also raises concerns about privacy.
To strike a balance between making the most of data and respecting privacy, the financial industry must adopt a customer-centric approach to data management.
The benefits of data
The fintech sector is in an interesting place right now. Despite seeing an investment slowdown as part of wider economic uncertainty, it still has the unique ability to move with the times and pivot better than banks and traditional financial institutions — after all, fintech was born from a need to streamline the delivery of financial services through digital tools.
This agility, important in times of economic uncertainty when things may need to change quickly, is largely down to the fintech industry’s ability to gather and analyse more data at a faster pace. The growth of digital connectivity is giving these businesses access to highly accurate, real-time data that can be put to meaningful use.
The benefits of data cannot be underestimated and utilising it in intelligent ways can be a real boon for fintech companies. Let’s take business spending management as an example. Businesses can glean so much information from the data that derives from employee expenses. Spend management solutions (and the data they collect) can help business leaders and their CFOs set spending limits and allow for greater visibility when monitoring and allocating budgets. And a CFO that can demonstrate such cost efficiencies in the current economic climate will be in a very strong position.
Solutions that harness artificial intelligence (AI) allow the finance industry to analyse large amounts of in-product data, identify patterns and trends, and use this information to provide customised financial products and services that meet the specific needs and preferences of each customer.
A financial institution might use data to identify which types of savings or investment products are most popular among certain demographic groups, and then use this information to develop customised financial products that are specifically designed to cater to those customers.
Building customer confidence with transparency
One key aspect of a customer-centric approach is the implementation of robust data protection policies and procedures. The finance industry is already heavily regulated, so should, in theory, be well equipped to adhere to data privacy regulations.
Any use of customer data raises a potential risk, so firms must fully understand liability issues and take appropriate measures to mitigate them. But aside from protecting the company from liability, prioritising privacy helps build trust with your customers. In fact, you could argue that nowadays this goes beyond trust, as consumers have higher expectations when it comes to privacy.
Recent research by Google and Ipsos revealed that 43% of respondents said they would switch from their preferred brand to a second-choice brand if the latter provided a good privacy experience. You could easily swap ‘brand’ for ‘financial service’, and it would still be entirely relevant.
Using strong security measures to protect customer data from unauthorised access and breaches is one of the more basic factors in data privacy. This also includes the regular monitoring and auditing of how your business collects, stores, and uses data.
Another important aspect of a customer-centric approach is giving individuals more control over their data. For example, companies can offer customers secure online portals where they can access and manage their data or provide them with the option to control who has access to their information and how it is used. It’s worth considering all the opportunities you have to build trust with your customers, while also ensuring that data is dealt with in a responsible and ethical manner.
So, the data conundrum doesn’t have to be a conundrum at all.
If your business implements robust data protection policies and procedures, is transparent about data collection and usage practices, and gives customers more control over their data, the data conundrum can be turned into a data opportunity. This opportunity can be further enhanced by the use of future-facing technology that will benefit both businesses and their customers in equal measure.
About the author
Richard Rosenberg is the Group Chief Product and Technology Officer of Spendesk, an accomplished senior manager and leader, currently running a cross-functional, multi-regional team and a multi-million-pound budget.
With a proven track record for delivery, particularly across complex projects with aggressive deadlines, involving multiple technical components and work streams, Rosenberg has experience in bringing in strategic change, particularly with introducing agile and lean delivery techniques.
He is a true industry expert on product engineering, mobile and tablet devices and interactive TV applications, with extensive experience of high-performing internet platforms.
