With a huge amount of data involved, specific real-time requirements, various or unstructured processed data, and data privacy compliance, new data management are crucial in implementing new customer-centricity. Financial institutions must create a data strategy that is supportive of this customer-centric paradigm they wish to become.
“The role of data management has significantly increased with the goal of all financial institutions to become a data-driven enterprise. With new emerging technologies – big data, artificial intelligence (AI), and Internet of Things (IoT) – financial institutions must redefine their data strategy and road map that also addresses new customer-centricity requirements,” said Handojo Triyanto, Lead for Customer Centricity at IDC Financial Insights Asia/Pacific.
Potential problems ahead
IDC warns that without an updated and robust data management system, financial institutions risk overloading underutilized data processing and storage infrastructure capacity. Also expect latency and throughput problems because of a slow data movement and processing system.
There is also potential for incomplete data for processing for decision-making because of limited data type/format handling. For example, predictive insights leveraging AI/machine learning typically involve unstructured data, such as images, voices, texts, etc.
IDC also cautioned data privacy and security breach caused by an unsecure system design.
The IDC report, Data Strategy and Road Map for New Customer Centricity in Asia/Pacific Financial Services Industry, explains the importance of data processing and management from a technology spending perspective, including customer centricity. The document also reveals a data strategy and roadmap methodology that include key components such as internal and external drivers, data management framework, and data architecture.
ICT spending analysis and forecast
Based on IDC's Worldwide ICT Spending Guide, 2020, data processing and management-related technology spending in 2019 is estimated to amount to US$ 24 billion – 29% of the total Asia/Pacific financial services industry technology spending (excludes spending for outsourcing and network categories). Growth in the next five years will be driven by analytics and AI (CAGR of 16.2%), integration and orchestration middleware (CAGR of 9.6%), and data management software (CAGR of 9.6%).
This clearly depicts the significant roles of data processing and management have in IT – accounting for more than 30% of the technology spending. Likewise, the trend also shows that data processing and management have high growth rates. Currently, customer relationship management (CRM) applications spend is forecast to grow at a compound annual growth rate of 13.5% in 2020–2024. IDC estimates CRM (software) spending reached US$1.3 billion in 2019 (excluding outsourcing spending) in the Asia/Pacific financial services industry.
“The most important thing is that a comprehensive and integrated data perspective across the organization is achieved. IDC Financial Insights' methodology stresses on the proactiveness of the chief data officer (CDO) to grab the drivers, and usage of industry-level frameworks in creating a specific data strategy and road map,” Triyanto concluded.