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  5. Data is the Fabric of Transaction Banking. Is it Woven into your Strategy?

Data is the Fabric of Transaction Banking. Is it Woven into your Strategy?

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8 June 2022
Colin Kerr

I recently joined the Celent Corporate Banking Practice, having spent most of my career working at the intersection of business and technology with (and in) global banks and technology vendors. I am excited to be here, because whether renovating traditional transaction banking services or developing new green field solutions, what was viewed as a staid business is now transforming rapidly. As the speed of business quickens, mobile technology, APIs, cloud platforms, and a new appreciation of the value of data are all enabling the future of corporate banking.

In Q4 2021, Celent released ‘Regaining Corporate Banking Momentum: Our 2022 Research Themes in Action’, which identified five key priorities driving the research themes for 2022.

1. Optimizing customer engagement delivery

2. Embracing disruptive imperatives in payments

3. Taking an ecosystem approach to growth

4. Driving product innovation and differentiators

5. Diversifying technology transformation toolkit

From my perspective, there is a key thread that weaves through all these themes. ‘Data.’ That’s a short word for a complex topic that raises challenging questions about how to manage and engineer data - and for what purposes.

  • Banking is one of the most data-intensive industries on earth. Compared to other industries that have transformed their businesses with data, one could argue that corporate banking risks missing the boat in capitalizing on the vast amounts of data available. Data technologies and capabilities continue to march forward and enable more effective data management, better business insights, and a modern foundation for new products and services.
    Why does harnessing the power of data continue to be such a challenge?

  • The reliable execution of transactions at scale is table-stakes for a transaction banking service. Data was traditionally viewed as a by-product of operations and used for reconciliation and report generation. Recent research by Celent finds that 38% of banks have made data monetization strategies an objective of their payment infrastructure investments. Expectations Versus Reality for Payments Data Monetization. The majority of respondents in the survey believe the data investment will improve efficiency of existing payments and banking services. Far fewer considered the opportunity of new business models. Data still appears to be an undervalued (or at least under-leveraged) asset.
    How can a broader view of data assets help transaction banks grow in the modern information age?

  • Many banks maintain a classical product management approach to banking services and revenue generation. They also have a separate ‘data team.’ In large part this is a logical result of the operational requirements and processes needed to ‘do banking’ and recognize revenue. Increasingly though, corporate clients look for solutions that help them run their businesses more effectively, not just to ‘do banking.’ That requires a new breed of information-based insights and services.
    What does it mean to embed the data within the solution strategy to transform the banking experience?

Without taking the textile analogy too far, data is the fabric of transaction banking. Therefore, data strategy (and investment) should be an integral part of all business strategies.

In the coming months, my research will dig deeper into these topics with banks and solution providers. As always, I welcome your input to our research agenda and feedback on the state of the industry.