by Arkatechture, on March 15, 2019
Banks already face enormous risk; some are mitigating theirs, are you?
These perils range from traditional fraud dangers linked to account and loan holder behavior all the way to operational hazards stemming from intensifying global cybersecurity threats and domestic regulatory upheaval.
Consequently, entities in the industry are ramping up their risk management strategies, especially those centered on data security and regulatory compliance, according to research from Deloitte. How? For most, it involves investing in data analysis capabilities. In fact, banks are expected to spend more than $22.5 billion on enterprise analytics solutions in 2018 alone.
Companies navigating the increasingly delicate financial services sector would be wise to follow in the footsteps of these forward-looking companies. Data-driven solutions can assist with risk management operations, empowering banks to operate with confidence.
Here are three ways firms can leverage data to minimize risk:
Improve Customer Data Security
An estimated 864 major data breaches have unfolded as of September 2018. Banks and other financial institutions were involved in more than 100 of these events, during which approximately 3.2 million sensitive files were exposed. This is problematic, especially in the era of the General Data Protection Act and other strict consumer information security laws.
While advanced technology is quickly becoming ubiquitous in the financial services industry, few organizations maintain fully mature data infrastructure, analysts from Capgemini discovered. In fact, 63 percent of adopters are still in the experimentation phase, meaning a good number of banks continue to rely on antiquated data management policies. Back in 2016, the Commonwealth Bank, Australia's largest financial institution, learned why hanging onto the old ways can lead to disaster. That year, the bank misplaced a number of tape drives containing the personal financial histories of 12 million customers. The event led to the resignation of then CEO Ian Narev and the expenditure of considerable company resources. Commonwealth Bank has yet to recover the information and has seen its reputation decline considerably since the breach.
Modern data solutions reduce the likelihood of such disasters, allowing financial institutions to easily gather, catalog and transport sensitive information without risking data loss and inevitable repercussions that follow.
Expand Credit Assessment Capabilities
Financial organizations have long attempted to evaluate customer credit worthiness as accurately as possible. The rise of formalized credit scoring has certainly helped in this regard. However, credit scores don't tell the whole story, which leaves room for error. For example, bank underwriting benefits from assessing these scores within the context of long term customer behaviors. Modern business intelligence solutions can facilitate this advanced analysis, allowing businesses in the financial services sector to mine unstructured data stored in external locations.
Ensure Regulatory Compliance
Regulatory bodies here in the United States and abroad have implemented a variety of new standards in recent years, forcing banks to develop and deploy new-and-improved compliance assurance and reporting workflows. Additionally, regulatory risk seems to be decreasing across the industry, according to research from Thomson Reuters. Even so, some banks are anticipating issues linked to political change and organizational expansion. These institutions are therefore looking to optimize their compliance processes and reduce risk. Many are turning to modern data technology, as it can automate reporting and help staff prioritize compliance activities.
Banks that have yet to deploy enterprise business intelligence solutions may want to consider embracing these innovative technologies to stay ahead of the curve.
Connect with us today to learn more about how Arkatechture is helping banks and credit unions reduce their risk.
