Legacy Data Sources and The Death of Modern Banking

How financial institutions can transform legacy data sources to embrace a highly personalized customer experience, attract new accounts, and stay competitive in the modern landscape.
December 8, 2022
Hakkoda - Legacy Data Sources and The Death of Modern Banking - Legacy Data Sources

In an era where in-branch customer interaction continues to trend down, banks have struggled to adapt to the new way of knowing and marketing to their customer base. Today, effective marketing is big data. One of the biggest hurdles in banking is accessing the data needed to execute at scale. It’s not that banks lack the data to create a more personalized experience, it’s that the data sits in various silos throughout the institution and aggregating that intelligence is challenging due to personnel and tools. In short, banks continue to rely on legacy data sources, and the failures of that strategy are reflected in the numbers.

While Meta, Netflix and Amazon have built their entire empires on customer data, banks have struggled to aggregate and derive value from theirs. Gone are the days when financial institutions had the luxury of building customer relationships over time, which led to a natural path of expanding product portfolios. 

Today, thriving banking institutions have one thing in common: they’ve embraced an entirely reimagined customer experience, and they’ve used Big Tech to get there. Fortunately, there’s still time for financial leaders to shift their organization’s trajectory. Almost 74% of bank operations leaders identify customer experience as their top strategic priority, indicating that for many banks, the goal is clear, but the path forward is slow and uncertain.

So, what should banks do? If your data isn’t up to par today, here are three immediate steps your financial organization can take to avoid the pitfalls of legacy data sources and start building a sustainable customer experience for the modern marketplace.

Step 1: Evaluate Your Data Warehouse Solution

Is that on-premise data warehouse from the early 2000’s scalable and able to handle the vast amount of data being created every single day? Can you easily query data and get up-to-the-minute results? Probably not. The legacy data sources and tools deployed at the beginning of the century simply cannot keep pace with the volume of data and real-time marketing needs in today’s world. 

It’s time for a migration. Many banks are already using a modern marketing tool, like Marketo or Salesforce Marketing Cloud, but make the mistake of pairing that tool with legacy data sources and old technology. Using old technology with a modern data stack system is akin to running low grade fuel in your Porsche 911. You are not going to get the intended performance.

Step 2: Embrace the Modern Data Cloud

Flexible, cloud-based solutions like the Snowflake financial services cloud are the present and the future. Not only are they capable of handling workloads associated with today’s data volume, but they are secure and integrate seamlessly with other platforms. Most importantly, they allow you to be prepared for the future. Having a centralized data platform enables teams from across the institution to use the right data for different needs in real-time. 

Think of it like this: You have multiple sources of data (Core Systems, LOS, CRM etc) that all house intelligence on your customers. Using data ingestion tools you are able to bring that data into a data warehouse like Snowflake and create a system of record. Here, you can query and process that data to prep it for the analysis and output into a Sigma or Tableau or to be used in marketing campaigns. 

Transitioning from legacy data sources to the modern data cloud is an enormously attractive option for modern banking institutions, and one with a significant financial payoff. Industry tailored solutions like the Snowflake financial services cloud solve security headaches while making it possible for banks to meet the increasingly high expectations of their customers. 

In the last few years, 57% of consumers reported believing it should take less than an hour to open a bank account. An additional 47% of customers said that a mortgage application should take no longer than one day. As expectations continue to rise, only financial institutions that have moved away from siloed, legacy data sources and embraced a centralized data cloud will continue to be able to compete.

Step 3: Get Creative and Tap Into Third-party Data

You’ve embraced the Snowflake financial services cloud and it’s time to execute! Marry your first-party data with third party sources from the Snowflake Data Exchange. This way, you can start to conduct real-time testing and optimization of your campaigns with enhanced data points. Are you running an auto purchase campaign? Get insight into specific interests or current car ownership through the vast pipeline of providers. Historically, this has been a very difficult task. However, with Snowflake, it is easy and leads to creating even more powerful and accurate customer profiles. 

Following this path will enable your bank to deliver tailored content, experiences and offers to the exact audience you are targeting, in the channel they prefer. Snowflake also facilitates real-time analytics to fine-tune messaging and creative assets to improve performance. Now you have more productive analytics teams, better marketers, and can deliver unique insights and offers to your clients in real-time, all by having a cloud based centralized repository. You can compete with the Big Tech’s and Fintech’s of the world at their own game, with better data.

Modernizing with Industry Leading Data Teams

Hakkoda helps bring use cases like this to life through our Financial Services practice. Combining deep domain expertise and scalable teams of SnowPro certified engineers, we can help your bank start on a data innovation journey that will transform the customer experience

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