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Banks are falling behind when it comes to understanding — and using — data

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Summary

Banks are struggling to use data effectively due to outdated systems. Banks have to find ways to monetize customer data without violating trust, and startups are developing ways to use alternative solutions powered by AI to make credit decisions. Marginal improvements in data strategy can have a huge impact, and financial institutions are leveraging payroll and employment data APIs to provide the next generation of financial products.

Q&As

How are banks using data to monetize and create incentives for customers?
Banks are using data to monetize and create incentives for customers by providing a simplified banking experience through account verification and authorization, incorporating credential-less integrations and easier user interactions, and analyzing hundreds of data points to generate tailored recommendations.

What challenges do banks face when accessing customer data?
Banks face challenges accessing customer data due to legacy systems in which it is stored.

What are some alternative solutions to traditional credit reporting databases?
Alternative solutions to traditional credit reporting databases include AI-powered solutions and analyzing hundreds of data points to generate tailored recommendations.

How can marginal improvements to a company's data strategy have a profound impact?
Marginal improvements to a company's data strategy can have a profound impact by making data easier to understand and use, and by improving customer trust.

What roles do developers play in bringing fintechs and financial institutions together?
Developers play a central role in bringing fintechs and financial institutions together by enabling payroll and employment data API platforms, which allow financial institutions to bring the next generation of financial products to consumers.

AI Comments

👍 This article does a great job of highlighting how banks are using data to create more streamlined and inclusive banking experiences for their customers.

👎 This article doesn't offer any concrete solutions for banks looking to improve their data strategies.

AI Discussion

Me: It's about how banks are falling behind when it comes to understanding and using data. It talks about how banks are restricted in their ability to access customer data due to legacy systems, and how banks and startups will start monetizing data and creating incentives for customers to generate more.

Friend: That's really interesting. It's definitely a shift in the banking industry. What implications do you think this has for banks and customers?

Me: Well, there are a few implications. For one, banks need to start investing in modern technology that can properly store and manage customer data. This will not only help them access customer data more efficiently, but also help them protect customer data and adhere to higher fiduciary standards. Additionally, customers will be more empowered to control when and how their data is shared, as well as receive incentives for providing data to banks. Finally, banks will be able to offer more personalized services to customers and create more tailored products that can meet their specific needs.

Action items

Research the latest data strategies being used by banks and financial institutions.
Explore the potential of using alternative solutions powered by AI to make credit decisions.
Investigate the benefits of integrating payroll and employment data API platforms into existing financial products.

Technical terms

Data: Information that is collected, stored, and analyzed to make decisions or gain insights.
Legacy Systems: Computer systems, applications, or technology that have been in use for a long time and are outdated.
Credential-less Integrations: A type of integration that does not require a user to enter credentials to access a service.
FICO Cutoff: A minimum score that a borrower must meet in order to be approved for a loan.
AI: Artificial Intelligence, a type of computer technology that can learn and make decisions on its own.
API: Application Programming Interface, a set of protocols and tools that allow two applications to communicate with each other.