But every new opportunity also introduces new challenges that must be considered and addressed. Following is an overview of some of the major data- and analytics-related trends that are affecting the industry today.
Industry context – what’s driving the trends
The competitive, regulatory, and technological landscape in the overall financial services sector has evolved rapidly in recent years. Key drivers include changing customer expectations – including a growing sensitivity to fees and a much higher demand for convenience and accessibility such as advanced mobile applications.
Competition from financial technology (fintech) companies helped accelerate these changes, and at the same time banks found themselves under continuing pressure to lower costs and improve overall efficiency and effectiveness. In response to these pressures, the nation’s largest banks have been working aggressively in recent years to take advantage of fast-changing technological advances.
Regional and community banks, on the other hand, often find they must allocate their more limited resources carefully in order to achieve the greatest possible benefit for their technology investments. As a result, the rate at which banks are adopting various advanced data science tools varies widely among individual institutions.
For example, when bank executives in a recent Crowe webinar were asked to characterize their institution's adoption of advanced data science technologies and techniques, more than a quarter (27 percent) of those responding said their bank was still focused primarily on the basics, using data for historical reporting and simple visualizations of trends. The majority (59.3 percent) said they were at various intermediate stages, either exploring their options or implementing some analytics projects (Exhibit 1).