Our Insights

Leveraging data as an asset

Understanding and unlocking the value of data

Data may be among the most valuable assets organizations currently own, yet a clear approach on how to appropriately value, store and utilize that data to support business decisions and outcomes remains elusive.

Key insights

  • From generating insights to predictive modeling, data is a key asset that financial institutions cannot afford to ignore
  • The proper utilization of data requires the breaking down of traditional silos in favour of a more holistic approach
  • While security concerns surrounding data remain top of mind in the wake of recent breaches and scandals, many potential issues around security and privacy can be mitigated by following the standards set by the EU's GDPR

What makes data unique from other assets? Data cannot always be easily measured, its theft could pose existential threats to a brand's credibility, and unlocking its potential generally requires a top-to-bottom cultural shift. As a result, data can be considered both a potential liability and a promising asset by financial institutions today.

The invisible opportunity

When used effectively, data has the potential to yield a significant competitive advantage, providing insights and predictive models in seconds rather than the days and weeks that analysts might take to decipher and draw insights. Jamie Stevenson, Global Head of Product Management, Data & Analytics for RBC Investor & Treasury Services (RBC I&TS), referred to a recent study by Forrester1 to put that potential into perspective during a panel discussion at RBC I&TS' recent Investor Forum in Toronto.2

“They are suggesting that insight-driven businesses will grow 40 percent per annum between now and 2021, compared to the average growth rate based on GDP of around 3.5 percent. That's a game-changing difference," said Stevenson, adding that only 13 percent of fund managers are currently realizing the full value and benefit of the data they have available to them.

Data has the potential to yield a significant competitive advantage, providing insights and predictive models in seconds rather than the days and weeks

Fellow panelist and Senior Vice President of Data & Analytics for RBC, Neil Bartlett, provided an example of what data utilization looks like in practice. He explained that one of the bank's products has been scanning financial news for a number of years. “It's able to, extremely accurately, predict mergers and acquisitions. It knows if there's an M&A opportunity, and it's highly accurate," he said. Bartlett believes data modeling represents a billion-dollar revenue opportunity.

Panelist Rick Kenneally, Vice President of Data Governance, Technology & Operations for RBC, went further, explaining that not all of those benefits can be measured in dollars and cents. He says that many of the companies he has spoken with are, “coming into it driven by regulators or revenue opportunities and in the process they're putting together the capabilities that make it easier to make system changes internally, get benefits from cost efficiencies and make their auditors happy."

How to grasp the intangible

Regardless of its potential, many are still cautiously approaching the concept of data utilization. “The challenge for all of us is that some of these things feel like science fiction," said Bartlett, “and how do you start to say, 'No, this is real, and I can use it immediately'?"

The challenge for all of us is that some of these things feel like science fiction

Kenneally explained that while data is a critical business asset, it has not historically been treated like one. Companies are accustomed to robust management of their financial assets, human capital, inventory and other assets. Data, by contrast, is an ever-changing asset with no easily measurable value belonging to a variety of stakeholders. He believes leveraging the full value of data assets requires a cultural change. “Where would you go for an inventory of your data assets? How would you place a value on them? Do you know how they're controlled? Do you know who's responsible for them?" he asked. “Changing the culture to answer those questions, putting the focus and thinking of data as an asset, and putting those organizational structures around it moves you to that culture and makes it much harder for your data lake to turn into a murky swamp."

Kenneally added that data has few boundaries and its utilization often requires a top-to-bottom approach, which may necessitate some reorganization and cross-departmental collaboration.

“Historically, it's been everybody's hobby and nobody's job, so my advice is change the organization," he said. “Organize around it, prioritize so that you focus on specific, high-value opportunities, iterate, learn, pivot, but keep focused on making sure you've got an organization that has the power and the access to work across all your organizational boundaries to bring these things together."

Addressing the pirate in the room

Data may pose significant opportunities to the financial services industry, but a number of high profile data breaches in recent months have demonstrated its potentially destructive power. “Is data creepy or cool?" asked Bartlett. “We have to make sure we use it in service of our clients."

Data utilization often requires a top-to-bottom approach, which may necessitate some reorganization and cross-departmental collaboration

Bartlett points to Facebook's recent public relations challenge and the resulting #deletefacebook campaign as an example of how mismanaged data can be costly – if not in direct financial terms, then to a brand's image.

Kenneally, however, believes that the implementation of the European Union's General Data Protection Regulation (GDPR) will help standardize how companies treat and use sensitive data.

“Many firms have issued policy statements saying that they will apply the GDPR approach. Where the client data is recognizable, the client can retrieve it on demand. Regulators globally will likely adopt a similar approach," he said.

A proxy for innovation

Data represents an important opportunity for financial institutions, though its utilization requires a more holistic and careful approach than many have taken thus far. Stevenson called data “a proxy for innovation," explaining that it drives opportunities with a whole host of technologies and capabilities. As financial institutions begin to grasp the golden opportunity data may offer, panelists agreed that following the strict GDPR privacy guidelines, and taking a holistic approach, will help enable an organization to realize its full value.

Panelists

  • Neil Bartlett, Senior Vice President of Data & Analytics, RBC
  • Rick Kenneally, Vice President of Data Governance, Technology & Operations for RBC
  • Jamie Stevenson, Global Head of Product Management, Data & Analytics, RBC I&TS

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Sources

  1. Forrester (October 18, 2017) Insights-Driven Businesses Set The Pace For Global Growth
  2. RBC Investor & Treasury Services (May 10, 2018) Investor Forum: Data