A few years back a catchphrase gained momentum in banking circles: “Data is the new oil.” The phrase has had its day, but the significance of the concept is higher than ever. Bank and credit union marketers understand this better than most because so much of their job today hinges on obtaining, maintaining, correlating and acting on data.
How that data is obtained and where it lives falls under the discipline of “data governance.” And issues of access and control have become greater challenges as more and more data crunching by marketing takes place outside of the traditional control of the IT department – and outside the organization itself.
In fact, that can be a friction point.
Why ‘Data Governance’ is a Marketing Department Focus
“What we see is a lot of instances of the marketing function splitting off and creating their own shadow factions within the enterprise,” says Glenn Kurban of Capco. “They’ve been creating their own systems to maintain marketing data, contact data, campaign data and more.”
This migration is much to the chagrin of the IT organization, says Kurban, a partner at the technology consulting firm. Most immediately, company policies on data-gathering may not be observed in a uniform way. Compliance with regulatory requirements may not be observed. Even tracking of consumer “opt ins” and “opt outs” under various regulations may not be available throughout the bank, which could trigger regulatory penalties. Further, independent data activities can blur the ultimate “source of truth” for information about customers.
“You see a lot of data governance efforts trying to get behind the curtain of what the marketing function is doing.”
— Glenn Kurban, Capco
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How Data Migration Gets Disrupted and Why that’s Bad
“Marketing departments are the targets of many bank data organizations because they tend to stand up their own stuff,” says Kurban. “But we have to be sure that we’re not just penalizing them for, at the end of the day, just trying to do their jobs.”
The risks of data existing in multiple places becomes an especially troublesome issue during “data migration,” according to Kurban. This can happen when a bank or credit union migrates its legacy core to a new core or otherwise to the cloud. This may happen as an institution moves to improve its IT on its own or when it is acquired or merges with another institution and the two organizations merge data and possibly computing functions.
Kurban explains that one of the big problems when multiple sources of customer data exist within a banking organization is that each source winds up with an incomplete picture of the customer. When data migration occurs it becomes an opportunity to meld the sources, which Kurban says can produce a “supercharged 360-degree view of the customer” that can support cross-selling and better analysis of what products customers may lack and why.
In the absence of unification of data, customer confidence in the bank or credit union can be endangered. When customers are repeatedly asked for information that they’ve given to the provider multiple times, it provokes questions.
Read more:
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- Why the Power of GenAI Lies in the Augmentation, Not Automation (or Replacement), of Bankers
- The Speed of the GenAI Revolution Is Creating a Regulatory Vacuum. What’s the Risk for Banks?
Data Migration Supports Real-Time Analytics and Artificial Intelligence
One of the unspoken truths about even some major banking IT operations is that when people speak about legacy core operating systems, they aren’t just talking about the software. Kurban confirms that some financial institutions’ IT operations still have their data processing foundations built on “big iron” — legacy mainframe computers that still look like what a “computer” typically was during the 1960s and 1970s, big tape drives and all.
Kurban says as processing increasingly moves to new cores and to the cloud, the cleaner and more uniform the data, the better the data migration. The fruits of that migration are better digitization of the institution’s business. As institutions migrate their IT to the cloud, that supports real-time analytics of bank data, while providing clean data for AI and GenAI to facilitate improvements in customer services, personalized marketing, finer credit analysis and accurate outreach.
When marketing is in the room when bank teams are strategizing data migration, they can push for the kinds of tools they need to better compete today. “God forbid, we jettison a data set that is critical to them, because then they’d have a business function they can’t perform anymore,” says Kurban.
“That old quote by Henry Ford about the automobile comes to mind: ‘If I had asked people what they wanted, they would have said faster horses,'” says Kurban. While some question if Ford ever actually said that, Kurban’s point is that marketers can shoot for tools that go beyond what they have now. They don’t have to settle merely for faster versions of old tools.
What Do Banks Really Need to Know?:
Marketers and their institutions as a whole can take the occasion of data migration as an opportunity to weigh afresh what they consider to be useful data.
A good portion of a banking company’s historical data may be useless information.
Migration isn’t a full “lift and shift” operation, according to Kurban, because some data should be left behind. “It can be less than a 100% operation,” says Kurban, “but that’s by design.” This is also the stage where data can get a good scrubbing so reliable information makes it into the new home.
Months may go by when marketing and other functions aren’t in the room, while all the grunt work is under way. But generally such functions come back into the room before IT team flips the switch and “does that hot cut-over from legacy platform to new platform.” (A hot cut-over means switching to the new system with no shutdown of the old one.)
“It’s kind of like the nuclear keys, right?” says Kurban. “Before everyone turns their keys, they make sure they all agree it’s time to go and everyone’s on board.”