Saving the Banks: Is personal finance next for data driven transformation?

2017-12-08T16:26:07+00:00 March 13th, 2017|Azure, Cloud, News|

Some of the most profitable companies, such as Uber, Netflix and Airbnb, were born in the cloud and are now at the cutting edge of providing their services by exploiting the plethora of data they have available to them. First it was Amazon and eBay who burst onto the scene and mopped the floor with retail, but in recent years the service industry, including the previously aforementioned, have caught up.

Which industries are the worst at doing this and seeing the slowest progression? Banks. Banks are struggling to undergo digital transformation due to the potential risks involved. Banks are built on stability, trust and security. Due to their age, banks store customer data in very old legacy systems, some of which has not been touched since the early 90s. The has happened because instead of banks moving customer data as times change, they have built clever systems which connects to wherever the data is stored and translates it so it can be used in more modern systems.

Imagine trying to connect to the raw data of your texts going in and out of a Nokia 3310 by plugging it into a series of adaptors, which eventually make that data readable through a USB connection. Many of the UK’s top banks are having to build systems which consider this old analogue data and are reluctant to move as they cannot risk an outage or interruption to service while they migrate. This is similar to many other analogue service industries such as video rental, taxi and hotels which are all now playing catch-up to their much younger competitors who have always had their data stored in the cloud.

Barclays have created an innovative mobile app, ‘Chip’, which uses an algorithm that calculates what you can afford to save based on previous spending habits. This money is then transferred into your ‘Chip’ account which is held within Barclays Bank. These personal finance and banking applications are starting to show the change that the financial services industry has struggled to deal with forever. More and more ‘micro-banks’ are appearing which challenge the status quo by delivering new insight into individuals spending habits. As consumer confidence in the service continues to build, digital financial advisors will become as normal as ordering a taxi on your phone.

Just imagine how much better you could be at saving money, if an app put away an extra £100-200 per month, knowing that you would have spent it on luxury items that weren’t necessary. And this will only get better with more access and insights to the data provided to the system, as they’re currently restricted to just transaction-only data in your banking app API.

Banks could even go one step further and offer much deeper and analytical dashboards and insights into people’s spending habits, with personal assistants being on hand to suggest ways to improve spending. To do this, a cloud-based platform such as Microsoft Azure would be needed to connect to the cloud and on-premises data to pull insights from the both.

Azure analytics can connect to both on-premises and cloud based data to deliver a comprehensive view of data. This then means banks can get this insight, and begin to transition to a more robust and secure data foundation by moving the stored data in chunks using Azure’s data services. This will help institutions even as old as banks transition and absorb new customers across the board, as they can offer these new digital services and insights directly to personal as they go along without seeing any disruption or reduction to services.

The key to these services is access and insight into data, and using it in new ways to improve the customer experience, financial institutions in both a B2B and B2C environment can benefit from this. Through the technology available in Azure, they are well positioned to achieve these new innovative services by connected to legacy on-premises systems, whilst slowly moving their data foundations to a robust cloud environment.