In the recent Ernst and Young report : The science of winning in financial servicesit has identified that the highest growing Financial Service company’s are outstripping their competitors. The secret sauce is that these high growth companies are focussed on exploiting data and analytics in revenue-generating areas such as marketing and sales.
According to the report, more than a quarter (27%) of high-growth companies – those achieving EBITDA growth of 15% or more in each of the last two years – describe themselves as “excellent” at extracting useful insights from data that improve overall competitiveness and performance, compared to only 12% of low-growth companies. Thirty-five percent of high-growth companies say they are “highly mature” at this task.
Given that this is driven by an effective digital strategy (getting data management, technology architecture, people and analytics right) it is clear these will create significant competitive advantage for companies.
Data is the competitive advantage and harnessing data correctly will drive new capabilities that go beyond technological investments. To enable this these high-growth companies increase spending in areas such as change management, personnel and skills. The report highlights that 24% of high-growth companies plan to increase their spending by at least 20% over the next two years, compared to just 7% of low-growth companies.
In prior years the focus of most analytics efforts has been in finance, marketing is now identified as the key area for significant improvements in data-driven business insight. Findings in the report identify that the most advanced users of analytics functions at these high-growth companies are spread across sales (24%), finance (22%) and marketing (14%), while the finance function at other firms has dominated.
A key focus of these new analytics capabilities are in using existing company data to analyse and identify new ways to enhance revenue. A challenge is defining the analytics strategy for insight and identifying the ways that the data is creating a new segmentation of customer data. (see here)
The report identifies the top two obstacles for companies in maximising their data within their organisations are concern over regulatory issues (43%) and data privacy restrictions (36%).
The emerging role of the Chief data officer is also covered in the report. Nearly 40% of all companies polled had identified the appointment of a chief data officer, companies were still struggling to identify the skills and people with the skills to be data scientists in their teams. Of the companies surveyed the lack of skills and the capability to undertake the data analyst roles required by the companies was seen as the biggest inhibiter with nearly 93% stating shortfalls, or inadequate skills.
According to the survey, this shortage is partly due to companies requiring a mix of skills and experience. This is not a surprise as this has been met by a number of companies in the past and is part of the maturing of an analytics function in those companies who are data driven organisations.
What is not covered in the report is the creation of analytics competence centres. Mature established companies who continue to succeed in Financial services and other industries have created multi-disciplinary teams that focus on insight and drive out value. In such teams the science related skills meet the arts and liberal disciplines and all need to be led in a manner that allows rigour, creativeness and exploration. Such teams and leaders are highly prized.
The teams structures differ depending on the environment and the maturity of the analysis environment, however core skills would include : computing science, data analysis, mathematics, statistics, econometrics, Business analysis, industry/operational experience around finance, operations and sales.
For some analytics competence groups this now includes psychology, behavioural analysis, marketing, specifically when looking at fraud, reputational risk, and social comments (complaints, social media, and more).
The report provides great insight to the evolving trends and the roadmap followed by high growth financial services companies who exploit fact based information for decision making.