Data blind spots and data opportunities: What banks and credit unions may be missing
This article delves into five critical areas where more effective use of data can transform operations: interest rate risk, liquidity management, credit risk assessment, sales diagnostics, and merger integration. By leveraging advanced analytics and real-time insights, smaller financial institutions can navigate economic uncertainties, adapt to regulatory changes, and seize opportunities in a data-driven landscape. The piece underscores the urgent need for community banks to evolve their data strategies to maintain their local advantage and thrive amidst fierce competition from larger, AI-equipped rivals.
Community banks and credit unions operate in an increasingly challenging marketplace. With dynamic interest rates, economic uncertainty and shifting consumer expectations, these financial institutions face increasing pressure to adapt and stay competitive. How they respond can make the difference between outperformance and underperformance.
The challenge is that many financial institutions still operate with management systems and reporting cadences that prevent them from meeting the demands of a dynamic market — mitigating its risks and seizing its opportunities on a timely basis.
Some institutions, especially smaller ones, operate at a slower pace — in effect, synchronizing their internal reporting with quarterly and annual requirements of auditors, investors and regulators. Others may set a high priority on maintaining a pristine balance sheet, but don’t capitalize on the sales signal hiding within their risk management data.
To be sure, most financial services leaders know that data can answer vital questions: How are we tracking against expense, revenue and product plans? What products are “hot” this month? What are the implications of borrowing trends and interest rates for our business as a whole? But these leaders are also, to paraphrase a former U.S. Secretary of Defense, well aware that both known unknowns and unknown unknowns are waiting to trip them up.
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