Managing Director & Partner
Savvier data analytics practices can help financial institutions (FIs) extract value worth billions of dollars. That’s the core finding of a new BCG study, prepared in partnership with Morgan Stanley Research. The study—based on interviews with data analytics executives and experts, a complementary survey, and joint analyses by BCG and Morgan Stanley—revealed that the financial services sector trails most industries when it comes to successfully generating value and actionable insights from data analytics.
FIs continue to collect vast amounts of data, but few are generating a return commensurate with their investment. The potential value of better data analytics—as a result of higher revenues, cost savings, improved customer service, and better decision making—could reach as high as $30 billion. Players that embrace leading practices will be able to grab a significant slice of that pie, while those that lack the required capabilities will have little choice but to fight for the remains and be threatened by disruption.
Among the issues holding back many FIs in the sector is a lack of actionable data sets, the kind needed to provide tailored, real-time offerings and advice. Moreover, many FIs do not have the breadth and depth of data in a given customer segment or product area to identify and target specific customers. Entrenched cultures and operational complexity can also make it difficult for institutions to adopt the rapid test-and-learn approach required of the most successful data and analytics initiatives.
Our study revealed five actions that FIs can take to address these issues and release the untapped value in data analytics.
We estimate that the effective application of data analytics could deliver an earnings-per-share improvement of 5% from cost savings alone, with long-term revenue generation opportunities bringing the prospect of even higher returns. FIs that move swiftly have the potential to gain a substantial competitive advantage over their peers.
To learn more about turning large, complex data sets into insights and competitive advantage, see BCG Gamma and BCG's approach to big data and advanced analytics.
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