Wealth Access Report FINAL - Flipbook - Page 5
“Smaller banks now have an opportunity to start seeing
the big picture about their clients like big banks do.”
Andy Zinn, Wealth Access
— and could even be an area it potentially monetized, espe-
“A uniquely American challenge, I would say, is our banking
cially as they thought about how to serve their niche market
architecture and systems are archaic relative to our peers in
of quick service restaurant owners and workers, says Will
other jurisdictions,” says Mohammad Nasar, a principal in
Rhoads, Sonata’s chief innovation officer. This focus comes
Crowe’s financial services consulting practice.
as community financial institution executives across the U.S.
have become more serious about utilizing their data over
the past decade, he says. Still, Rhoads sees varying levels of
maturity and sophistication across institutions.
There is a “tremendous” amount of data stored in legacy
systems, says James White, general manager of banking
at customer relationship management software firm Total
Expert. Older technology systems could only store data of a
“Many [community banks] today are leveraging data for
certain width, which meant that entries into these systems
things like risk management, fraud detection and compli-
were constrained, and the rest was discarded. Some files still
ance reporting, but they’re not using it for proactive deci-
use 8-bit EBCDIC, or extended binary coded decimal inter-
sion-making,” he says. “They’re living in an environment
change code, used in the IBM mainframe.
where their data is siloed across all these different systems
… that makes it hard to really pull all [the data] into one
location.”
Compounding the technology limitations is that most financial institutions are organized through what Nasar calls “a
financial product-centric architecture.” Regardless of wheth-
In Bank Director’s 2024 Technology Survey, 34% of
er an institution is using its core providers or leveraging
respondents reported that they were in the early stages of
third parties and fintechs, most systems are geared towards
their data strategies, using data in just a few areas of oper-
servicing a specific class of products and are not focused on
ations, while 40% reported they use data in several areas of
a broad customer-centric view. Because of that, an institu-
their institutions but still saw significant room for improve-
tion’s lending division — commercial and consumer — may
ment. Sixteen percent reported not having a data strategy.
not be connected to the deposit group, the brokerage division
or the trust department and wealth management. These
One reason why Rhoads thinks small institutions struggle
is because their data is in a format or location they can’t
leverage to create meaningful efficiencies or greater growth
opportunities. Technology of yesteryear, it seems, has created
systems store customer data in specific ways, creating information sets in a siloed manner that may have overlapping
entries with slight differences that make the dataset unreliable for analytics purposes.
many of the data problems that banks need to solve today.
To that end, Sonata started a project in 2024 to bring all
Take, for example, one pernicious data problem financial insti-
its data into a data lake house. A data lake house is a data
tutions face: their customer records. Technology companies
architecture platform that combines the flexible storage
— ranging from large incumbent firms like online retail giant
aspects of data lakes with the structure and management of
Amazon.com down to nascent fintech startups — have demon-
data warehouses.
strated that understanding the customer is key to profitability.
EFFECTIVE DATA MANAGEMENT: CRAFTING YOUR DATA STRATEGY | 3
