Banks and credit unions have traditionally thought of themselves as guardians of peoples’ financial well-being — particularly their cash. Today, the Information Age is forcing a different view: protecting financial assets is no longer sufficient. Consumers are looking for a trustworthy partner to help them manage their financial data and make it accessible to a growing number of internet-connected tools and services.
Not every community financial institution can (or should) pretend to be a fintech company in a three-piece suit. However, there are steps that you can take to partner with fintechs and position yourself to serve consumers’ financial needs in the virtual realm.
How you think about your business model matters a lot. Broadly speaking, there are two categories of community financial institutions: those who stick to the core banking services and those who see the world of connected technology as a gateway to growth. Neither approach is necessarily “wrong;” however, the competitive landscape is trending heavily towards connection and a more open approach to data.
By pivoting your mindset to meet this shift, your institution will be prepared to prosper amidst the disruption.
Data as a product. It’s a concept that’s just crazy enough to transform our industry and pave the way for community banks and credit unions to compete with much larger institutions. And now is the time to begin building the infrastructure and human resources that you’ll need to tackle this challenge.
Data “readiness” is something your institution will rely on more and more in the next five to ten years. Fortunately, there are trustworthy partners and resources that can help you along the way.
Megabanks are aggressively using data and machine learning to identify opportunities — their scale is tough to compete against, but you still have a fighting chance.
Putting your data to work is a long and complex journey; one you’ll need a roadmap to navigate. It’s helpful to understand the various stages of data maturity as well as practical things that you can do with your data. Start with reporting historical data, and then move through reporting what’s happening now, and eventually advance to predicting and optimizing.
Once you’ve developed a sophisticated data infrastructure, your work doesn’t stop there — unless you’re Capital One, Experian, Equifax… the list goes on. Major organizations who should exemplify best practices grow complacent instead and it costs them. Securing your data is about constant vigilance and planning. The risks are real and manageable. Here are five things you can learn and take action on, avoiding the need to follow in the misguided footsteps of others:
Safeguard data by testing vulnerabilities.
Follow data storing regulations.
Take accountability following a breach.
Be honest and accurate in your statement.
Proactively alert affected consumers — and offer help.