Drowning in Data, Financial Services and Insurance Industries Seek Technology and Talent to Close Global Insights Gap

Across the globe, companies are amassing volumes of data with the intent of optimizing performance, identifying trends and meeting rising consumer expectations. Yet nearly 75% of global financial services and insurance executives admit they are challenged by the fractured nature and vast amount of data available, citing rich analytics capabilities as difficult to achieve. In Hong Kong, this challenge is even greater with 82% of executives admitting they are challenged by the immense data they have.

Even with these challenges, a new Aite Group study commissioned by TransUnion (NYSE: TRU) found that executives in the financial services and insurance industries plan on continuing to secure more data sources. Furthermore, they look to incorporate more artificial intelligence (AI) and machine learning (ML) technology into their analytic platforms to help them make sense of the information.

The global study explored the existing analytical processes, tools, data sources and operational effectiveness of analytics solutions used by the financial services and insurance industries. The quantitative online survey recorded the feedback of 682 marketing and risk executives at financial institutions located in Hong Kong, U.S., Canada, U.K., and India, many of whom do business across the globe.

The study found that the proliferation of AI/ML is expected to continue over the next 24 months with three in four global executives considering integrating new analytic technology into their platforms. There’s good reason for this implementation as AI and ML can shorten the traditional analytic lifecycle from months to just weeks or even days.

“Businesses are reevaluating their technology investments, and looking to implement artificial intelligence, machine learning and alternative data models and sources,” said Gene Volchek, senior vice president of global data science and analytics at TransUnion. “Their end game is to gain deeper analytics and competitive insights that better allow them to mitigate risk and meet consumer needs. Ultimately, the companies that best leverage these data and analytical technologies will provide consumers with the best experiences, resulting in more revenue.”

Help Wanted: Talent and Technology to Enhance Analytic Capabilities

To stay competitive in a data-rich world, companies need access to cutting-edge analytic solutions and data science expertise. However, the study found that inflexible legacy technology, talent shortages and regulatory barriers are among the factors that prevent businesses from harnessing the power of analytics with speed and ease.

“Most financial institutions lack a single, cohesive analytics platform,” said Tiffani Montez, senior analyst at Aite Group. “Firms may have vastly different data repositories and teams managing analytics functions, often leading to multiple approaches – by line of business, role and channel – across their institutions. To address these issues, many financial institutions are looking to centralize their data into a single platform that can quickly support change and integrate new data models.”

Enhancing analytic capabilities through AI/ML technology is a top priority globally, but with distinct differences across geographies. Hong Kong is in line with global AI/ML technology adoption with 14% of Hong Kong executives indicating they currently do not have any solutions that can implement AI/ML into analytical models. Additionally, 62% of Hong Kong respondents also believe this technology is a major competitive differentiator.

The data scientist talent shortage is another pressing issue contributing to the global insights gap. As the volume of data has increased, the need for data science and analytics professionals has increased exponentially. Globally, 86% of respondents noted there are challenges with accessing the right data science and analytics talent, compared to 88% of executives in Hong Kong.

Analytics Challenges Across Regions

*The Aite Group Global Survey of Marketing and Risk Executives was conducted in Q3 2019.

To enable purposeful insights development, it is crucial for companies to streamline their processes and have closer alignment between the technical tools that are readily available and talent with specialized knowledge of turning data into insights. In the report, financial institutions noted they are increasing their investments in both talent and in analytics technology – but these firms are also greatly increasing their investments into another resource, more data.

Despite Challenges Surrounding Analytic Capabilities, Data Sources are Expected to Grow

Financial institutions have placed an increasing amount of influence on the value of expanding data sources. The desire to invest in data includes new sources such as non-traditional, third-party and alternative data among the banking and insurance communities. Over the next 24 months, 95% of institutions in Hong Kong have plans to use alternative data – nearly the same percentage as across the globe (89%).

More than half of global respondents plan to increase spending on most types of data sources with 65% intending to increase spending on newer forms of data such as mobile information about web browsing and app usage. In Hong Kong, this percentage was even greater at 77%. A similar number of Hong Kong executives (79%) also indicated that the integration of new data sources will be very important or important to their business strategies. Yet the lack of the right tools continues to pose an issue as only 17% of Hong Kong firms can integrate new data sources across all of their analytic solutions.

Hong Kong Investment in Alternative Data Sources Expected to Increase Over the Next Two Years

*The Aite Group Global Survey of Marketing and Risk Executives was conducted in Q3 2019.

The survey also found that in Hong Kong 91% of marketing executives and 89% of risk executives expect their overall budget for data analytics to increase year-over-year. This was higher than the global average of 78% and 70% respectively, and points to a significant investment in expanding the amount of data available despite ongoing challenges such as data cleansing and preparation, which 74% of Hong Kong respondents said can be challenging, compared to a similar number of 76% globally. This is in addition to the larger operational issues such as cumbersome technology and the talent deficit.

“Our research shows a high level of awareness among Honk Kong financial services and insurance executives of the key investments they need to make to compete at both a regional and global level. Having the right data and analytics solutions in place is key to the development and continued growth of the Hong Kong economy. Businesses in the region are already starting to participate in schemes like the Smart City initiative and by embracing the competitive advantages deeper customer insights can bring they can continue to adapt and succeed in today’s consumer-driven market,” said Jerry Ying, vice president, innovative solutions group, for TransUnion in Asia Pacific.

To learn more about the state of analytics in the financial services and insurance industries, please access the full Aite Group and TransUnion report, Current State Assessment: Global Analytics Ecosystem. More information about TransUnion’s analytics solutions can be found here.