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High-Growth Financial Services Companies Are Using Data and Analytics to Increase Revenue

Date: 02/03/2015
Source: EY


  • High-growth financial services companies are more than twice as likely to rate their ability to analyze data for competitive use as excellent, compared to lower-growth companies
  • High-growth firms are also twice as likely to focus on data and analytics in revenue-generating areas
  • Only 7% of financial services companies say they have enough data analysts

Although 83% of financial services executives claim data is their firms’ most strategic asset, 47% say they do not have a full grasp of that value, with high-growth firms being the most adept at maximizing their data’s potential, according to EY’s The science of winning in financial services.

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.

High-growth companies are twice as likely to focus on data and analytics in revenue-generating areas such as marketing and sales, the survey found. These organizations corral data and apply it strategically across their business.

Technology is only one piece of the puzzle
Harnessing data’s competitive capabilities goes beyond technological investments. High-growth companies are more likely to increase spending in areas such as change management and personnel and skills. In both of these areas, 24% of high-growth companies plan to increase their spend by at least 20% over the next two years, compared to just 7% of low-growth companies.

Companies previously focused most analytics efforts on finance, though marketing is now identified as the function where significant improvements in data-driven business insight will be seen next. The most advanced analytics functions at high-growth companies are spread across sales (24%), finance (22%) and marketing (14%), while the finance function at other firms has dominated, the survey found.

Hyong Kim, EY Global and Americas Financial Services Data and Analytics Leader, says: "Financial services firms are focusing their analytics efforts on new opportunities to enhance revenue by mining customer data, although most companies have much more work to do in this area. Developing a clear vision of how they want to analyze data will help companies define how information will create value for both the company and the increasingly connected customer."

Skills shortages affecting companies
While nearly 4 in 10 of all companies polled have appointed a chief data officer, firms struggle to find adequately skilled data scientists to fill their teams. Only 7% of financial services companies surveyed say they have sufficient numbers of data analysts throughout their businesses.

According to the survey, this shortage is partly due to companies requiring a mix of skills and experience: both those with a pure data science background, and those with more experience with commercial applications. And despite the competitive salaries of the financial services sector, potential candidates face lucrative offers from other sectors, particularly the high-tech industry.

Regulatory and data privacy concerns still dominate
The top two obstacles for companies in maximizing their data use are concern over regulatory issues (43%) and data privacy restrictions (36%). In fact, one in five financial services companies (21%) expect spending related to data privacy to increase by 20% in the next two years, and 15% say the same of spending on governance and oversight.

Fewer businesses expect such increases in data-related investment in personnel (11%), change management (13%) or technology (13%).

Aurelia Costache, Financial Services Industry Advisory Leader, EY Romania, says:
"Financial Services Companies started to realize the huge potential of the data they hold and are working hard to exploit its value. Therefore, Data Strategy topics started to appear in more and more Banks’ Business Strategies. We see similar trends in the Romanian market as the one underlined in the global survey: financial institutions are moving from compliance related data management initiatives towards data and analytics in revenue enhancing areas such as marketing and sales.

One of the key challenges they need to overcome is the awareness and willingness to conduct an honest self-appraisal, to determine the organizations’ current maturity level in order to decide where to focus the business’s energies in order to provide a high level of data quality which is the key of success in the digital age."

Read the full report The science of winning in financial services at ey.com/FSdataanalytics.

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Notes to Editors
About the survey
EY surveyed 150 financial services firms from around the world in the banking, insurance and asset management sectors between August and September 2014 to learn how data and analytics are affecting their businesses and how they are investing in these capabilities. The respondents were split equally between North America, Europe and Asia. In addition, qualitative interviews were conducted with senior executives at a number of leading global financial services groups to gain further insights.

About EY Romania
EY is one of the world's leading professional services firms with approximately 190,000 employees in 700 offices across 150 countries, and revenues of approximately $27.4 billion in the fiscal year that ended on 30 June 2014. Our network is the most integrated at global level and its vast resources allow us to help our clients benefit from every opportunity. In Romania, EY has been a leader on the professional services market since its set up in 1992. Our over 500 employees in Romania and Moldova provide seamless assurance, tax, transactions, and advisory services to clients ranging from multinationals to local companies. Our offices are based in Bucharest, Cluj-Napoca, Timisoara, Iasi and Chisinau. In 2014, EY Romania has affiliated to the only global competition dedicated to entrepreneurship, EY Entrepreneur Of The Year. The winner of the local edition represents Romania in the international finale that takes place every year in June in Monte Carlo. The World Entrepreneur Of The Year title is awarded at the international finale. For more information, please visit www.ey.com.

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