Examining how executives are grappling with challenges of more data

Does more data mean more problems? You might arrive at that conclusion based on information from a new Aite Group study commissioned by TransUnion.

Across the globe, companies are amassing volumes of data with the intent of optimizing performance, identifying trends and meeting rising consumer expectations. Yet this new research showed nearly 75% of financial services and insurance executives admit they are challenged by the fractured nature and vast amount of data available.

As a result, experts think it’s difficult for many of them to achieve rich analytics capabilities to further their respective businesses.

Even with these challenges, this study found that executives in the financial services and insurance industries plan on continuing to secure more data sources. Furthermore, they look to incorporate more artificial intelligence (AI) and machine learning (ML) technology into their analytic platforms to help them make sense of the information.

The global study explored the existing analytical processes, tools, data sources and operational effectiveness of analytics solutions used by the financial services and insurance industries. The quantitative online survey recorded the feedback of 682 marketing and risk executives at financial institutions located in the U.S., Canada, U.K., Hong Kong and India, many of whom do business across the globe.

The study found that the proliferation of AI/ML is expected to continue during the next 24 months with three in four global executives considering integrating new analytic technology into their platforms.

There’s good reason for this implementation as AI and ML can shorten the traditional analytic lifecycle from months to just weeks or even days, according to Gene Volchek, senior vice president of global data science and analytics at TransUnion.

“Businesses are reevaluating their technology investments, and looking to implement artificial intelligence, machine learning and alternative data models and sources,” Volchek said in a news release.

“Their end game is to gain deeper analytics and competitive insights that better allow them to mitigate risk and meet consumer needs,” he continued. “Ultimately, the companies that best leverage these data and analytical technologies will provide consumers with the best experiences, resulting in more revenue.”

Help wanted to enhance analytic capabilities

To stay competitive in a data-rich world, experts acknowledged companies need access to cutting-edge analytic solutions and data science expertise. However, the study found that inflexible legacy technology, talent shortages and regulatory barriers are among the factors that prevent businesses from harnessing the power of analytics with speed and ease.

“Most financial institutions lack a single, cohesive analytics platform,” said Tiffani Montez, senior analyst at Aite Group. “Firms may have vastly different data repositories and teams managing analytics functions, often leading to multiple approaches — by line of business, role and channel — across their institutions.

“To address these issues, many financial institutions are looking to centralize their data into a single platform that can quickly support change and integrate new data models,” Montez continued.

 Enhancing analytic capabilities through AI/ML technology is a top priority globally, but with distinct differences across geographies.

The United States lags in AI/ML technology adoption with 22% of U.S. executives indicating they currently do not have any solutions that can implement AI/ML into analytical models. While this capability may be commonly lacking, 66% of U.S. respondents also believe this technology is a major differentiator.

The study indicated the data scientist talent shortage is another pressing issue contributing to the global insights gap. As the volume of data has increased, the need for data science and analytics professionals has increased exponentially.

Globally, 86% of respondents noted there are challenges with accessing the right data science and analytics talent, compared to 74% of executives in the U.S.

“To enable purposeful insights development, it is crucial for companies to streamline their processes and have closer alignment between the technical tools that are readily available and talent with specialized knowledge of turning data into insights,” officials said.

In the report, financial institutions noted they are increasing their investments in both talent and in analytics technology — but these firms are also greatly increasing their investments into another resource, more data.

Analytics Challenges Across Regions

*The Aite Group Global Survey of Marketing and Risk Executives was conducted in Q3 2019.

Despite challenges, growth expected

TransUnion and the Aite Group emphasized financial institutions have placed an increasing amount of influence on the value of expanding data sources. The desire to invest in data includes new sources such as non-traditional, third-party and alternative data among the banking and insurance communities.

During the next 24 months, the study noted 89% of institutions have plans to use alternative data.

More than half of respondents plan to increase spending on most types of data sources with 65% intending to increase spend on newer forms of data such as mobile information about web browsing and app usage.

In the U.S. alone, 44% of executives indicated that the integration of new data sources will be very important to their business strategies. Yet the lack of the right tools continues to pose an issue as only 14% of U.S. firms can integrate new data sources across all of their analytic solutions.

The survey also found that across all regions, 78% of marketing executives and 70% of risk executives expect their overall budget to increase year-over-year, for data analytics /big data and analytics/data science tools for each role, respectively. Volcheck explained this finding points to a significant investment in expanding the amount of data available despite ongoing challenges such as data cleansing and prep, which 76% of respondents said can be significantly challenging.

He added this is in addition to the larger operational issues such as cumbersome technology and the talent deficit.

Global Investment in Alternative Data Sources Expected to Increase Over the Next Two Years

*The Aite Group Global Survey of Marketing and Risk Executives was conducted in Q3 2019.

“Integrating data from across a consumer’s credit journey provides a rich canvas for drawing insights, however it is clear that financial and insurance industries are struggling to manage and extract the right information without access to the proper analytical tools or having people with the right skillset,” Volchek said.

“Those companies that put in the investment will also most likely develop the top solutions that make them more competitive in today’s consumer-driven market,” he went on to say.

To learn more about the state of analytics in the financial services and insurance industries, access the full Aite Group and TransUnion report titled, “Current State Assessment: Global Analytics Ecosystem,” on this website.