Sunday, December 28, 2014

Finance 2.0: Big Data at Swiss Banks, Shortcut equal the Road to Ruin!

Without doubts, big data has a tremendous potential to revolutionize client advisory and client relations at banks together with all the other components of Finance 2.0.  Since big data is only a part, the other components of Finance 2.0 need to be understood before heading forward. It is about improving client interactions in the first, the second and the third place. There is no easy way. It means hard work and an active presence in the Finance 2.0 world and in the social networks is required.  As tempting it might be to take a shortcut on the Finance 2.0 road directly to big data and leave all those other cumbersome aspects behind as risky it is as well. 

An article by the Swiss news portal FinewsUBS and Credit Suisse: "Big Brother" in Client Advisory (in german) has inspired me to write this blog post. Obviously in public and client opinion the risks and disadvantages are seen as bigger than the advantages of big data. This has to be taken seriously. It seems that UBS and Credit Suisse who have not yet fully arrived in the Finance 2.0 world head straight forward to the easier to measure big data area. Moving fast is good, taking shortcuts might deliver the opposite result of what they hope for though!

Big Data is like Gasoline, it can power a Car or blow it up

It is not enough to understand how to explore and foster oil and produce gasoline. It is also important to handle it the right way and to understand how an engine and a car works, else it is very dangerous. Also big data is very powerful, but a lot of knowledge is needed about big data in general and above all about the whole Finance 2.0 environment. As gasoline in the wrong hands, big data can cause damage.  In the wrong hands means, people with too little knowledge but also people with the wrong intentions. Finance 2.0 is about fulfilling client’s needs at its best not to find new ways to sell more profitable products. If that is not understood it’s too early for big data.

An old Sales Rule: Sympathy before Trust before Benefit applies also in this case

The rule says if one want to advise a client, want to sell something, first the potential client needs to have sympathy for the sales man. That is always the first step. It does not make sense at all to move ahead before there is no sympathy. The next step is to win the clients trust. As much as one would like to talk about benefits, it is meaningless if the client has no trust. Certainly if used the right way clients could benefit a lot from big data, only potential benefits do not matter as long there is not enough sympathy and trust. Remember the survey, when clients said they would rather talk to their doctor than to their bank advisor.  In the lately published Credit Suisse Worry Barometer Swiss asked about whom they trust the most, banks rank 16th place.  With all Finance 2.0 elements combined and with active and honest interactions with clients, sympathy and trust can be reached. Unfortunately sympathy and trust are only the first two steps and do not pay money but cost time. That is maybe why banks and companies in general tend to limit their activity and their effort in this area and focus more on activities which seem to promise benefits relatively soon. Again the problem is that the first to steps are essential for sustainable success in the future. This is valid for the offline as for the Finance 2.0 world. If that is not understood, it is too early for big data as well. 

Clearly the tremendous amount of data banks are holding is a huge competitive advantage towards technology companies such as Google and Facebook.  This could save Swiss banks from loosing ground significantly. Only, rushing ahead, taking shortcuts without building a Finance 2.0 culture, without having a sound understanding what Finance 2.0 is all about and focusing on big data too strongly and too quickly, could result in the opposite. Instead of increasing client loyalty and gain new clients, clients might be driven away in to the arms of smaller none bank companies. It might support the development that in the future clients will decide by service and will not have one bank that handles all their needs but a number of services from various providers.

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