Global companies are amassing volumes of data to optimize performance, identify trends, and meet rising consumer expectations. Yet, a recent study showed that nearly 75% of global financial services and insurance executives are challenged by the fractured nature and vast amount of data available. This is making effective data analytics challenging to achieve, and making a case for artificial intelligence (AI) and machine learning (ML) stronger.
The new Aite Group study, commissioned by TransUnion, found that executives in financial services and insurance companies are acquiring more data sources in a bid to become competitive and efficient. These include new sources such as non-traditional, third-party, and alternative data among the banking and insurance communities. Over the next 24 months, 95% of institutions in Hong Kong have plans to use alternative data – nearly the same percentage as across the globe (89%).
More than half of global respondents plan to increase spending on most types of data sources, with 65% intending to increase spending on newer forms of data such as mobile information about web browsing and app usage. In Hong Kong, this percentage was even higher, at 77%. A similar number of Hong Kong executives (79%) also indicated that the integration of new data sources will be very important or essential to their business strategies.
Yet the lack of the right tools continues to pose an issue as only 17% of Hong Kong firms can integrate new data sources across all of their analytic solutions.
AI and ML can shorten the traditional analytic lifecycle from months to just weeks or even days. The report found that the proliferation of AI/ML is expected to continue over the next 24 months, with three in four global executives considering integrating new analytic technology into their platforms.
As a result, enhancing analytic capabilities through AI/ML technology is now a top priority globally. But there are distinct differences across geographies.
Hong Kong is in line with global AI/ML technology adoption, with 14% of Hong Kong executives indicating they currently do not have any solutions that can implement AI/ML into analytical models. Additionally, 62% of Hong Kong respondents also believe this technology is a significant competitive differentiator.
"Businesses are reevaluating their technology investments, and looking to implement artificial intelligence, machine learning, and alternative data models and sources," said Gene Volchek, senior vice president of global data science and analytics at TransUnion. "Their end game is to gain deeper analytics and competitive insights that better allow them to mitigate risk and meet consumer needs. Ultimately, the companies that best leverage these data and analytical technologies will provide consumers with the best experiences, resulting in more revenue."
However, there are still significant headwinds in using data. Companies reported that they need access to cutting-edge analytics solutions and data science expertise. However, the study also found that inflexible legacy technology, talent shortages, and regulatory barriers are among the factors that prevent businesses from harnessing the power of analytics with speed and ease.
The data scientist talent shortage is another pressing issue contributing to the global insights gap. As the volume of data has increased, the need for data science and analytics professionals has grown exponentially. Globally, 86% of respondents noted there are challenges with accessing the right data science and analytics talent, compared to 88% of executives in Hong Kong.
"Most financial institutions lack a single, cohesive analytics platform," said Tiffani Montez, senior analyst at Aite Group. "Firms may have vastly different data repositories and teams managing analytics functions, often leading to multiple approaches – by line of business, role, and channel – across their institutions. To address these issues, many financial institutions are looking to centralize their data into a single platform that can quickly support change and integrate new data models."
The report also found that in Hong Kong, 91% of marketing executives and 89% of risk executives expect their overall budget for data analytics to increase year-over-year. This was higher than the global average of 78% and 70% respectively, and points to a significant investment in expanding the amount of data available despite ongoing challenges such as data cleansing and preparation, which 74% of Hong Kong respondents said can be challenging, compared to a similar number of 76% globally. This is in addition to the broader operational issues such as cumbersome technology and the talent deficit.
“Having the right data and analytics solutions in place is key to the development and continued growth of the Hong Kong economy. Businesses in the region are already starting to participate in schemes like the Smart City initiative and by embracing the competitive advantages deeper customer insights can bring they can continue to adapt and succeed in today’s consumer-driven market,” said Jerry Ying, vice president, innovative solutions group, for TransUnion in Asia Pacific.