Bankers love numbers and poking their heads in spreadsheets. That’s why we find it rather odd that so few banks are really good at analytics. And even fewer implement their analytic findings to boost profitability. How is that even possible in an era when data is so abundant and revolutionizing industry after industry, from books to airlines?
The latest MACAW Bulletin gives you not one, but six reasons to why banks fail at analytics. These are observations from working with banks in countries across five continents. And the findings are surprisingly consistent. Maybe your bank is the exception, and you really are great at analytics, but odds are you will recognize your bank in some of the following.
Locked in Old World thinking
Look at what Facebook, Google, Amazon and Apple are doing with IT, analytics and rethinking business models. They have revolutionized everything from web hosting and search engines to music, books, and even payments. They are capitalizing on information, analytics and performance optimization. Banks are watching from the sideline. In the end it will be too late to be proactive to change.
No culture for innovation
Banks attract many clever people, but they tend to be economists, accountants and lawyers. When did you last attribute ‘innovation’ to any of these professions? Sadly we find few truly innovative marketers, business-wise engineers, or entrepreneurs working at banks. And when the occasional brightly shining star does come along, she tends to fight an uphill battle for gaining acceptance at management level to challenge conventions.
No statisticians
Among the numbers loving bankers, where are the statisticians? One might find the occasional number cruncher with a statistical degree working in risk management at a bank, but they are surprisingly few and even rarer are those allowed to participate in business development processes.
Legacy systems
Mature banks will groan when you say 'we need this data'. The data is spread across different systems, and what’s worse, they’re legacy systems. Often it is a patchwork of spaghetti that almost no one wants to go near, and even fewer know their dark, inner workings. But legacy systems are not all to blame. A lot of it has to do with attitude.
Other reasons why banks fail at analytics:
Banks attract many clever people, but they tend to be economists, accountants and lawyers. When did you last attribute ‘innovation’ to any of these professions? Sadly we find few truly innovative marketers, business-wise engineers, or entrepreneurs working at banks. And when the occasional brightly shining star does come along, she tends to fight an uphill battle for gaining acceptance at management level to challenge conventions.
No statisticians
Among the numbers loving bankers, where are the statisticians? One might find the occasional number cruncher with a statistical degree working in risk management at a bank, but they are surprisingly few and even rarer are those allowed to participate in business development processes.
Legacy systems
Mature banks will groan when you say 'we need this data'. The data is spread across different systems, and what’s worse, they’re legacy systems. Often it is a patchwork of spaghetti that almost no one wants to go near, and even fewer know their dark, inner workings. But legacy systems are not all to blame. A lot of it has to do with attitude.
Other reasons why banks fail at analytics:
- Wrong KPIs
- Risk adversity
This blog post is an excerpt from MACAW Card Bulletin 54: Why banks fail at analytics. Purchase your subscription today to obtain the full article. Contact sales@macawresearch.com.
