MSNBC published an article titled What Banks Can Learn From Google and Facebook with the subtitle “Data mining is still a stumbling block for banks, but tech companies could point them in the right direction.” The author writes:
“Big Data is huge right now, but many companies are struggling to harness the potential of this new phenomenon. Chief among those slow to adapt to new methods of parsing information are banking institutions, which are in danger of being left behind in this brave new world of data management. Despite the myriad uses Big Data could provide for the banking industry, these institutions are somewhat sloggy in their implementation of the technology. Not only would using such information take the guesswork out of the creation of banking products for consumers, but it can also be used for risk reduction. For instance, banks such as Ally Financial have used data-mining consultants to help reduce losses on subprime auto loans.”
My take: The inconsistencies and unsupportable assertions in this article make it an embarrassment to high quality journalism.
First off, exactly what proof does the author have that financial institutions have been “sloggy” in their deployment of Big Data or data management technology? None, of course.
The bigger problem, here, is that — once again, like so many other articles polluting the Internet — the term “Big Data” is used without any definition or qualification, as if its definition was universally understood and accepted. Which it isn’t.
In addition, the author refers to FIs’ sloggy implementation of “the technology.” Exactly what “technology” would that be? BI software? Data management apps? Customer databases? Web analytics tools? If she’s referring to these technologies, than FIs have hardly been “sloggy” in their deployment of them.
It’s nice that she offers an example of how FIs could use “big data” to “take the guesswork out of the creation of banking products for consumers” as if credit card issuers haven’t — for decades — been using statistical analytical techniques to identify prospects and the types of cards they’d be most likely to accept.
It’s also nice that Ally Financial (it must kill them to be called a “bank”) is using data-mining consultants to help reduce losses. I bet that they’re the only financial institution in the United States that uses consultants! Of course, do I need to mention that that just because Ally is using data-mining consultants, that doesn’t mean that what they’re doing qualifies as “big data” consulting. Which we don’t know, because the author didn’t define what Big Data is.
Later in the article, the author writes:
“Financial institutions aren’t the only ones that grapple with the best way to manage and utilize vast amounts of data. A new study by data management giant Oracle notes that many companies are aware of Big Data’s potential but are at a loss regarding the best way to use the mass quantities of data they are now gathering.”
MSNBC takes pains to criticize financial institutions for not capitalizing on Big Data, but readily admits that FIs “aren’t the only ones that grapple with the best way to manage and utilize vast amounts of data.” If FIs aren’t the only ones, then why single them out?
And even further in the article, we find this passage:
“Google and Amazon.com stand out as companies that really know how to gather and utilize data. Google, for instance, was instrumental in the development of Hadoop, an open-source platform that excels at analyzing data, as well as MapReduce, used in conjunction with Hadoop. And who can forget the fine Google paid for gathering too much information for Street View, not to mention the latest $23 million assessment for tracking Safari users?”
I completely agree that Google and Amazon stand as firms that know to gather and use data. But by citing the fines that Google paid for the misuse of that data, doesn’t it make financial institutions look good for not engaging in consumer unfriendly tactics that could violate privacy rules?
The author throws a bone to Citibank by reporting:
“Other banks (besides Ally Financial) are beginning to explore new possibilities in this area. Citigroup has been surveying users on its Facebook page on their feelings about social banking on the site, presumably in preparation for offering its services in conjunction with the social-media site sometime in the future.”
And this has what to do with Big Data? Nothing, of course.
Bottom line: Hey MSNBC! Tear down this article! (How do you like my Ronald Reagan impression?). It’s a poor excuse for business journalism.