Using Data Wisely to Remain Competitive

Karl Dahlgren, Managing Director of Research, BAI

There is a lot of buzz in the industry about using data to drive strategy, but there is an infinite amount of information out there. It can be overwhelming for financial services leaders to decide which type of data is most important for their strategic direction and growth. Many leaders understand the importance of tracking key metrics to monitor growth, patterns, and trends of the organization. Yet, one of the most meaningful metrics is often overlooked: how the bank compares to and differentiates from peer financial services organizations.

It is of the utmost importance for leaders to not only understand how the organization is performing, but also how the bank is performing in the marketplace relative to competitors. These type of insights can be derived through benchmarking research programs. These comparative analytics programs can help determine areas of strength and uncover opportunities for growth, overall and by market.

A benchmarking or comparative analytics research program can also help leaders better understand where to make investments and measure effectiveness in relation to their peers when establishing and assessing strategic plans. From retail deposit performance to investment benchmarking, talent management to marketing, comparative analytics provide a critical view of performance that leaders need to drive their businesses. Additionally, benchmarking enables leaders to establish realistic goals and strategies that can be measured, monitored, and adjusted over time.

Comparative analytics research programs also help financial services leaders identify opportunities for their organization at the regional and market level.

For example, a bank may tout being a leader in small business banking due to high new business acquisition rates. But, when compared against peer organizations, leaders at the bank learn that their organization is not on par with competitors in terms of growing or cross-selling their small business segment relationships over time. This type of birds-eye view identifies an area of opportunity for the bank to reconsider its acquisition and cross-sell approach for this important segment. By leveraging the insights gleaned from benchmarking research, financial services leaders can develop strategies based on product performance and competitive opportunities to be more profitable and better meet the needs of consumers.

Comparative analytics research programs also help financial services leaders identify opportunities for their organization at the regional and market level. For example, a bank may use benchmarking research to see how its branch network is performing in a specific market relative to its peers. By using comparative analytics, leaders can have a precise, all-encompassing view of the market conditions and be able to identify and pursue the strongest growth opportunities in that specific market. Leaders can also gain a strong understanding of how individual branches are performing and why, and pinpoint which products provide the biggest opportunities in the area.

There are many different levels across the bank that can benefit from comparative analytics. From business, commercial, and consumer to talent, marketing, and culture, leaders within different departments can gain critical, fact-based insight about their department’s strengths, weaknesses, opportunities, and threats by comparing themselves to their peers.

When considering a benchmarking program, the most important factor is ensuring that the information is both unbiased and accurate. For instance, in the consumer banking segment, leaders should seek a comparative analytics program that uses account-level data to draw comparisons. This type of quantitative data is often more difficult to obtain and keeping customers’ data safe is of the utmost priority, so it is extremely important that financial services leaders seek a research partner who has a history of managing highly sensitive information. It is also critical for the information to be timely, so consider research organizations that provide regularly updated information to ensure that the bank is staying aligned with market demands and competitor activity. Lastly, the data itself won’t tell the story, leaders should seek a partner who can help them derive the insights from the analytics.

Comparative analytics research is one of the most powerful tools to generate insights and drive growth. Without accurate comparisons to other banks, leaders risk developing a limited view and understanding of the organization’s full potential. The financial services industry is more competitive than ever; it is paramount that leaders look to data and insights to drive strategy and stand out from the pack, and those that are able to find the key insights at the right time are going to obtain that coveted competitive advantage.