Data, Feb 03, 2021

How a data ‘A-Team’ can help overcome systemic changes in banking

Mohammad Syed

During a recent quarterly earnings call, Microsoft CEO Satya Nadella stated: “We’ve seen two years’ worth of digital transformation in two months.” The message of this statement is clear: the world is not changing, it already has.

Companies with sophisticated data capabilities have adapted to the 'new normal,' while those with limited capabilities have accrued significant losses. As the pandemic has strained financial markets, impaired the credit system, and reduced liquidity levels, existing data & analytics trends have intensified and new, complex challenges have arisen for banks. These include: 

  • The need for greater operational efficiency during a time of great upheaval in the workplace;
  • Financial losses due to exceptionally high loan impairments, resulting in capital problems;
  • Customer relationships changing from primarily in-person experiences to digital ones.

Chief Data Officers (CDOs) need to rapidly establish an ‘A-Team’ to define and execute disruptive change in order to stay relevant and ensure they are meeting the needs of their digital customers.

Read next: How banks can achieve the promise of open banking with a data mesh architecture

Systemic changes in banking

The scale and impact of 'the new normal' has meant that businesses have had to deliver previously impossible levels of change in just a few weeks. For CDOs, this represents a unique opportunity to deliver lasting change with real business commitment. Resources are easier to get hold of and cultural barriers are easier to overcome when leadership is convinced and individual goals subside.

CDOs now have a number of strategic business issues upon which to build a case for change:

  • The continued low interest rate environment has reduced core banking profitability in mature markets. As a result, banks are required to explore alternative models of income driven by data.

  • An increasing range of channels, products, partnerships, and interaction points has brought Customer Relationship Management (CRM) back into the spotlight, with a stronger emphasis on digital experiences.

  • New models of customer interaction that are real-time, constant, and immediate require the adoption of NLP and Image/Video Recognition into customer-facing applications, as well as back-office operations such as marketing, portfolio & risk management, and compliance.

  • Delivering change quickly and profitably requires the adoption of cloud technologies, raising the need for data governance, security, and privacy to control data and manage risks.

  • An evolving regulatory environment for data privacy & ethics is complicating digital transformation and requires the organisation to have much better control of data and data-related decisions.

The organisation is looking to the CDO to define what data & analytics maturity means in the context of systemic change, how this translates into ‘on the ground’ capabilities, and what the investment priorities should be. There is also a need to understand how cultural barriers will be broken to establish new ways of working. It is at this stage that CDOs should consider forming their ‘A-Team’.

Why form an ‘A-Team’?

In these times, it is imperative that CDOs build momentum around a bold set of ambitions. The organisation needs to change quickly, and its stakeholders know it. In order to move quicker than ever before, CDOs need a team of high-performing, experienced individuals with expertise in: 

  • Enterprise architecture to map, decompose, and reimagine the way in which things are done today and help the business realise how things could be done tomorrow;

  • Business planning & modelling expertise to meaningfully convert plans, dependencies, and priorities into costed roadmaps that their colleagues can get behind;

  • Programme design & management to help them manage their priorities and funnel immediate and long-term issues into a cohesive, coherent roadmap that will help the organisation to maintain focus;

  • Deep technical & delivery expertise in cutting-edge technologies, delivery practices, and paradigms for data & analytics, supporting both business engagement and IT alignment.
The team will help CDOs assess current capabilities against industry-leading frameworks and evaluate the enablers and blockers to change through a combination of deep technical and business expertise. It will help them to define the data & analytics strategy and its priorities, identify critical capabilities, and how business outcomes are underpinned by technical capabilities.

The team is key to moving from a plethora of ‘burning platforms’ to a modern target state, allowing CDOs to clarify their vision, engage stakeholders, and maintain focus.

Building your team

Creating a team that has this blend of expertise and execution experience requires careful analysis of the business environment in which they will deliver. We recommend that CDOs:

  1. Educate the organisation on the need for a data & analytics strategy and organise a team to create it.

  2. Discover enthusiastic business communities and plan to demonstrate real-life results through prototypes or hackathons, making sure that any investments are business-led.

  3. Define a basic approach for business engagement and define what they need in a small team. Consider how the team will work with stakeholders to gather information and drive new thinking.

  4. Quickly survey the current state against popular industry frameworks. While a detailed maturity assessment can wait, highlight obvious material deficiencies to focus the new team.

  5. Set a clear focus by answering questions such as: 'where to invest first?', 'what is success?', and 'who defines good?' so that the team can hit the ground running from day one.
As priorities develop, it is important to lay down the main business needs and issues and gain an understanding of whose opinion really matters. To begin, the organisation may need to get its basics right with some data governance initiatives, so CDOs should build a case around that to help the team land.

Setting the team’s priorities

The immediate focus of the team should be the following:

  1. Establish a baseline strategy that can be evolved as the CDO learns more about the new business, economic, regulatory, and competitive environment post-COVID-19;

  2. Evaluate in-flight investments and re-focus on growth opportunities, ensuring that the ROI of strategic initiatives outweighs the cost of delivery and that downsides are validated;

  3. Envision a data-driven business model and how it will enable the business to compete in the ‘new normal’, engaging business leaders to agree a plan for the change they believe in;

  4. Define a data & analytics service portfolio to rise above the top performers in the industry, as well as new entrants such as Amazon, in enabling front-line innovation;

  5. Tackle inertia and uncertainty by working with a small group of high performers to shape options. Reassure business leaders by showing an understanding of their needs.

In a nutshell

As a CDO, you need to listen and educate at the same time. You need to navigate a complex, fast- moving environment which looks to you for clarity. You need to be flexible to other opinions, while staying true to your course and vision, and your ‘A-Team’ can support you throughout the process.

If you would like to learn more about the topics discussed in this blog post, please get in touch with one of our experts.

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Read more:
How can retail banking adapt to the new normal to keep up with customer demand?

Podcast: Is brand loyalty a dying trait in banking?
Podcast: Is brand loyalty a dying trait in banking? - Part two
How wealth managers can use data to keep focused on what really matters: Achieving digitisation success
Data governance as an enabler: Agile data governance

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