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A lack of skills in using data to support business strategies is hampering the attempts of UK finance firms to meet customer demand for personalised products and services.
According to research from data and analytics consultancy Cynozure, there is also a lack of understanding of the value of data at senior levels of UK financial services organisations.
Following a survey of 200 senior executives at finance firms, half of whom were in the UK, Cynozure revealed that 27% of respondents lacked the skills needed to make good use of data. About a third (31%) said this data skills shortage was across the entire organisation.
One of the problems faced by financial services companies is understanding the return on investment of data investments. Over half of respondents (52%) said this was the biggest barrier to introducing or improving the use of data.
Jason Foster, CEO at Cynozure, said the research revealed an opportunity for financial services firms in the UK to revamp their data strategies and start benefitting from data. “Used correctly, data can bring a host of benefits to organisations in the financial services space, particularly at the moment when many people are looking for more personalised financial support to help them through the cost-of-living crisis.”
Most (94%) respondents agreed that data insights would be an important way to support customers as the cost-of-living crisis worsens.
Jason Foster, Cynozure
According to research by open banking technology supplier Tink, over a third (35%) of people who are struggling financially would change their bank account provider if it meant they could access tailored financial support.
But none of this will be possible if the right skills are not in place to develop data-led solutions.
Traditional banks need to improve their use of data if the automation of personalised banking is to come to fruition and match that of more digitally savvy tech-led competitors.
Challenger banks are showing the way in adopting data strategies to personalise financial services for consumers. Zopa Bank, for example, is attempting to build an experience for customers similar to what they get from video streaming service Netflix or from online retailer Amazon.
Amazon and Netflix have very complex technology in the background, but the customer interface is very simple. Machine learning methods used by Zopa are similar to those pioneered by the likes of Netflix and Amazon to advise users of the habits of other customers.
The lack of data skills goes way beyond the finance sector. According to a 2022 survey by data management consultancy Carruthers and Jackson, 64% of the 211 data leaders surveyed and interviewed globally believed that most or almost all employees in their organisations were not data literate.
The study also found that only one in five people were confident in their data literacy skills and 74% felt overwhelmed when having to work with data.