Data and Strategic Alignment in the Bank of the Future

Now is the time to enter the platform economy
 
Dr Jonathan Trevor literally wrote the book on Strategic Alignment, and is one of the premier thinkers, commentators and practitioners in this crucial aspect of management. His comments and insights are frequently published in leading journals, including Harvard Business Review and the media including the Financial Times, BBC, Wall Street Journal, CNN and Forbes. So, it was an honour to spend focused time with him as part of the Oxford Saïd Customer Executive Education in partnership with Teradata. In conversation with about thirty Teradata customers from across the global banking industry, Dr Trevor outlined his thinking on the importance of alignment, and how to achieve it.
 
As he spoke a number of key themes resonated with me and what I hear from customers. Strategic alignment is easy to understand, but hard to do; there is a balance between creating value and managing risk; and in today’s dynamic environment, banks need to ensure their strategies are agile to keep up with customers’ demands. I believe that orchestrating the bank’s data assets is crucial to delivering each of these.

Silos hinder alignment

One of the issues highlighted by Dr Trevor was the rapid growth and diversification strategies pursued by banks looking to bolster low organic growth. As more teams, organisational structures and cultures are brought together there is often too little attention paid to resetting corporate purpose and aligning all parts of the business to common goals. The same is true of data. Too many silos supporting specific processes, operations or parts of the business, make it all-but-impossible to leverage data to drive the predictive analytics and banking data models that are essential to build the agile, responsive bank of the future. Concerted efforts are needed not just to integrate data, but to educate employees and create a data-driven culture.

Data that drive growth and mitigate risk

Value creation and risk minimisation are fundamental aspects of strategy in any organisation, two sides of the same coin.  But, according to the participants in our workshop, the focus is often too much on the value creation side. I’ve seen the same – with those working in governance and compliance seen as somehow less strategic than the value creators. However, with access to the granular, real-time data risk management can become more proactive and strategic. Risks can be accurately predicted and mitigation more precisely managed, freeing capital for growth. As we know banks create and own terabytes of data. But if it is fragmented it is harder to understand and measure risk as well as spot opportunity. Creating effective data platforms and data cultures support a more balanced view of these aspects and drive more effective alignment.

Data fitness and agility

Strategic alignment also means having the right organisational structures to win in your chosen market segment. Dr Trevor demonstrated how its possible to win in a variety of different ways, depending on your purpose and the things that are valued by your customers. Banks are seeing unprecedented changes in the expectations of customers and their historic advantages of stability and efficiency are no longer sufficient. Customers are expecting more personalisation, and a wider variety of value-added services. To make this shift, and to remain agile and flexible to ongoing changes banks are having to reassess their strategic and organisational structures. Once again, data plays a significant role in this. Generating value from the data they hold, analysing it and automating interactions to enable segment-of-one service interactions will be the new organisational architecture that will help banks to win.
 
Strategic alignment in the bank of the future rests on an enterprise value chain that flows from overall corporate purpose through strategy and capability to specific management systems. Data must flow in a similar way, linking together to provide insights and actionable models that create value and transform alignment into success.