Predictions in Banking Analytics: My Forecast for 2014

It’s been quite a year in banking analytics – regulatory challenges, growth opportunities, new fraud threats, and the surge of mobile as the hot channel for customer engagement. I expect 2014 to bring even more change. Based on my conversations with clients over the past few weeks, I’ve put together my top five predictions for banking analytics in 2014.  

Big Data winners and losers exposed. The Big Data hype engine is finally cooling off. Although Big Data will always be part of banking, I believe 2014 will be the year in which Big Data technology consolidation will begin in earnest. The winners and losers will become clear as a “standard” technology stack for Big Data emerges. Ease of use will improve, expanding the opportunity for data analysis beyond the market leaders or the technology savvy in any given industry sector.  In the banking sector, innovation will move away from Big Data infrastructure towards analytic tools and applications.  

Customer experience will be king. As banks try to accelerate growth, optimizing the customer experience will become the focus at many institutions. In particular, the move toward more web-based and mobile interactions will give banks new opportunities to cultivate more profitable relationships. Banks will increasingly rely on analytics to enhance customer service, improve the relevance and timeliness of offers, personalize communications, and make each customer relationship unique.  

No relief from compliance headaches. Banks will focus more resources on compliance in 2014 to avoid unintended consequences that can arise when analytic-based decisioning isn’t managed properly (e.g., conduct risk). In countries like Australia, the U.K. and the U.S., for example, there have been concerns expressed about pricing for financial products that may disadvantage certain groups of consumers.  

Experimentation drives breakthroughs. Knowing how to tease out predictive relationships in data or how to search for unknown patterns will be a key determinant of success in 2014. Companies in all industries, including banking, will embrace systematic experimentation to make analytic discoveries more quickly and efficiently. This will drive our next breakthroughs in use cases for analytics.  

People, people, people. I’ve discussed this in the past and I feel it bears repeating. The analytic talent shortage will grow. Recruiting headaches for banks will persist, and salaries for analytic professionals will increase (which could be very good news for people in our line of work). I expect this to remain the case for several years until we approach equilibrium in talent supply and demand.  

As the strategic importance of analytics continues to rise, 2014 will be a memorable year for the banking analytics community. At FICO, we are excited about what the future holds, and we can’t wait to see how 2014 unfolds.  

Happy New Year!