Whose job is it to wake the sleeping data giant?
By Drew McMullen
There’s been a great deal of discussion about the need to create a new chief data officer position at community banks. The fact that the discussion is happening at all is a positive sign for the banking industry—for it signals that data is being viewed and valued for what it truly is: a significant corporate asset and key differentiator.
In the ideal world, every community bank would have an executive in charge of its data—someone empowered to oversee and manage all data and analytics activities throughout the organization.
Isn’t that the role of the chief information officer? No.
Here’s why: The chief information officer’s primary responsibility is delivering the technology necessary to run a bank. This includes maintaining and updating core banking systems and applications, ensuring that the network is optimized and that proper information security procedures are in place. I would argue that it’s not just unrealistic but risky to make the chief information officer also responsible for ensuring that the data contained in these systems is effectively used by the community banks and its staff.
The volume of data that community banks must manage is growing exponentially as technology and social media have opened the flood gates on the flow of customer data. The result is a wealth of information. The challenge is making sense of it.
While community banks are proficient in collecting vast amounts of data, most have not yet implemented the best solutions for analyzing and using this asset. That’s what’s behind the movement to create a chief data officer position. To put someone in charge of that data with the goal of realizing the value, which, although finally being acknowledged, still lies dormant at most banks. I liken it to a sleeping giant.
It’s the chief data officer’s job to wake up that data giant and put it to work for the bank—leveraging data to guide business decisions and gain competitive advantages.
The chief data officer provides the leadership and drives the data management transformation. With the needed authority and accountability, he or she ensures that proper data is not just collected but analyzed, interpreted and made available throughout all bank functions to increase performance, reduce costs and improve the customer experience across all channels.
So, that’s the ideal scenario: a chief data officer. In reality, however, many small community banks may lack the resources needed to create an entirely new position for this purpose. So what are they to do?
For these banks, data must still rise to the top of the organization and to the top of the priority list by assigning someone to shoulder the responsibilities of a chief data officer. The bottom line is that it’s not the title that matters but the function.
What are the critical first steps?
1. Establish real data leadership. Whether hiring a chief data officer or tapping an existing bank employee, it’s absolutely essential for that person to have the authority and accessibility to do the job effectively.
2. Break down the silos. From check processing to ATM transactions to mobile deposits, internal systems can make it difficult for some banks to share data between departments. When one hand can’t see what the other is doing, it often results in duplication, inefficiencies and lost opportunities for revenue. This can be the single largest opportunity for cost savings at many banks. The chief data officer (or surrogate) can streamline the way data is shared across various IT systems by creating a data ecosystem in which data is centrally stored and accessible by all bank functions.
3. Enhance and leverage customer relationships. Customers are banking whenever and wherever they want—demanding convenience and efficiency. At the same time, many covet personalized service. In other words, they want it all. As a result, banks must find new ways to elevate their product and service offerings and differentiate themselves. This can be the single largest opportunity for revenue generating at many banks. The chief data officer (or surrogate) can play a critical role by establishing data analytics resources to gain new insight into customers’ needs and product performance—and leveraging the findings to create new offerings and competitive advantages.
For most banks, especially smaller to medium-size community banks, the data giant remains fast asleep. Banks that take action now to develop leadership around data—whether by creating a chief data officer position or by assigning the responsibilities to an existing bank officer—will wake the giant and discover what they’ve been missing out on all along.
Drew McMullen (firstname.lastname@example.org) is partner and financial services segment for Sense Corp., a management consulting firm in St. Louis.