Co-ops and credit unions should use big data technologies to help transform their business model if they want a true competitive advantage, according to EY’s global Ready to Takeoff report.
Big data is defined as high volume, high velocity or high variety information assets, according to Gartner, that require new forms of processing to enable enhanced decision making. The value of big data lies in the insights that businesses can draw from it, rather than in the information itself. According to the study, it offers huge opportunities for financial co-ops in areas such as customer behaviours, segmentation, fraud detection and credit risk management.
The report, presented at the International Summit of Cooperatives, states that 20% of businesses which successfully use data outperform their peers by up to 20%.
“The combination of the explosion of data and the rapid development of new technologies capable of storing and processing this information is transforming the way enterprises run their businesses,” says Drazen Nikolic, partner in EY’s Advisory Services in Germany.
“For example, financial institutions have vast transactional data at their fingertips. This can be leveraged to gain greater insight into individual customer profiles as well as general segmentation.”
But alongside the opportunities that big data presents, the report identifies some serious risks, including the legal and regulatory hazards relating to issues such as data privacy that can result in breach of trust.
According to Mr Nikolic, enterprises need a “holistic and strategic” plan in order to identify opportunities, overcome hurdles and manage risks. To get the most out of big data, organisations require a “transformation” as well as “closer collaborations between various functions, and a shift in the mindset of board members”.
Added Mr Nikolic: “There is an increasing volume and variety of data now available. Businesses that are able to use analytics to extract value from this data will be the ones able to establish a competitive advantage.”
- For more updates from the 2014 International Summit of Cooperatives, click here
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