DATA IS THE NEW OIL AND BANKS ARE THE OIL WELLS OF THE 21 ST CENTURY
Data is the new oil, because data is the resource fuelling most business activities across industries. Data, just like crude is a raw material which has to be mined, refined, processed and utilized. Banks are the new oil wells step by step learning the rules of upstream and downstream; data creation, extraction, collection, cleansing, refining, processing, distributing, selling to third parties or utilizing for internal sales purposes.
Banks are going through tremendous digital transition and in the new digital economy data is the key input and output. The amount of data available globally has exploded since the early nineties and we are facing two aggressive trends further accelerating the amount of ‘digital oil’ banks have to soon deal with:
(1) DATAFICATION: Datafication is the trend and process of turning analogue information into data. A great example is all sorts of visual satellite pictures from parking lots of large retail chains to geologic patterns of melting glaciers being turned into numeric information. Articles, natural speech, texts and visual content of social media posts are now getting ‘datafied’ at mass scales.
(2) 5G MOBILE DATA: An intergalactic shift is underway in what we know as mobile internet. 5G protocol compared to the current incumbent 4G technology will have the capability to produce up to 1000 times faster speeds, significantly lower latencies as well as longer battery lives. This will bring into the mainstream new paradigms of data production as well as consumption: Internet of Things, Augmented Reality, Virtual Reality, Haptic Devices and more.
Banks are currently gearing up to utilize the data they have. This is a painstaking and slow process. Meanwhile, technology giants such as Google, Apple, Facebook, Amazon, BaiDu, Alibaba, Tencent, JD and others are becoming the kings of data. Technology giants have superior access to data as well as ability to process it and carry out agile actions based on the implications of data analysis. This widening gap between incumbent traditional banks with often outdated core banking systems versus the data related capabilities of technology giants is the most visible in China and South East Asia. The reason for this additional visibility is that Chinese regulations are much more liberal in terms of allowing entities to create data related positive synergies between different companies, industries and activities. The European Union has a rock solid and tight set of data privacy regulations often dubbed as GDPR, General Data Protection Rule. European regulation will soften the dynamics of incumbent banks getting exposed to direct data competition. Yet, the end game will be the same in Asia and Europe: Banks will have to learn to master data and to process it, turn it into AI (Artificial Intelligence), ML (Machine Learning), NN (Neural Networks) as well as DL (Deep Learning). Abilities to survive and win digital transition will be partially determined by banks’ abilities to become ‘oil wells of the 21 st century’ and master the new oil: DATA.
THE AUTHOR OF THIS ARTICLE, DAVID GYORI, GLOBALLY RENOWNED FINANCIAL TECHNOLOGY TRAINER WILL PROVIDE ‘ADVANCED DIGITAL BANKING AND AI’ TRAINING PROGRAM ON THE 17TH AND 18TH OF June (SUNDAY AND MONDAY) IN DUBAI, UAE.