• Service: Advisory, Management Consulting
  • Industry: Financial Services, Banking
  • Type: Business and industry issue, Publication series
  • Date: 9/19/2012

Turning big data into big value 

Turning big data into big value

By Alessio Marinelli, KPMG China


Is your organization drowning in data? Chances are this may only get worse. Given the dramatic growth forecasted for transaction volumes in Asia (which, according to The Nilson Report in 2010, are expected to top USD10 trillion by 2015), it seems clear that Asia’s payments processers face both a significant risk and a massive opportunity when it comes to dealing with Big Data.

Managing risks and taking advantage of opportunity

The risk posed is that Asia’s payments organizations may quickly become overwhelmed by the huge amounts of data in their systems and fail to translate their Big Data into big value. Indeed, to date, many of Asia’s largest payments organizations have generally lagged behind their global peers in their collection and use of data. Essentially, this means that significant value – and possibly competitive advantage – is being lost.


Big Data creates a massive opportunity for Asia’s payments participants. The simple fact is that payments processers have access to an enviable amount of customer data which, when properly analyzed and packaged, can generate new revenue streams for banks and valuable insight for their clients, particularly in the retail, hospitality and leisure industries. Spending patterns can be analyzed, products can be better promoted, and data can be aggregated and resold to interested parties. Moreover, once armed with this level of customer insight from payments processors, companies can subsequently start to evolve their liquidity management and ensure that investments are being channeled to the right projects at the right time.


However, many of Asia’s payments processers face significant challenges in reaching this goal. For one, payments leaders will need to evolve their business intelligence (BI) from simply collecting and collating information to also focusing on analytics and aggregation. Consequently, Asia’s payments industry will need to assert the value of their data and accompanying analytics to those clients that would benefit most from this information.  


Much to lose, but more to gain

Based on the experience of peers in other regions, Asia’s banks also stand to gain significant internal advantages from maturing their BI and data analytics capabilities. One major area of opportunity is in the back office. By delivering more insightful and timely analysis, a bank or card company may, for example, gain a clearer understanding of the impact of foreign exchange adjustments on their payments. This will effectively lead to improved currency hedging within the treasury department and result in better cash management and forecasting.

Another area of high value for payments providers comes from using data analytics to draw a clear picture of the lifecycle profitability of each available channel. This delivers greater insight into how transactions move and how that links to the propensity to buy or customer preferences for each of those specific channels.


The path to data enlightenment

So what can Asia’s payments participants do to reap the full value that Big Data offers? Firstly, organizations must understand what they hope to achieve from their BI and Big Data strategies. This will require them to truly understand their business strategy and then work from the top down to identify the individual key performance indicators that support the achievement of the organization’s goals. In other words, rather than simply responding to the immediate demands of the organization, BI leaders would be wise to focus on ensuring that their long-term strategy clearly aligns to the strategic goals of the organization.

Organizations will also need to develop the capability to discern what data (and from what source) delivers the most valuable insight against that strategy and what data only adds complexity and uncertainty to the process.

China’s leadership clearly recognizes that a functional, efficient and secure payments system is key to maintaining growth. Indeed, as the Governor of the People’s Bank of China, Zhou Xiaochuan, noted, “The extensive development of China’s payment system in recent years, and its safe and efficient operation, has effectively supported and promoted economic and social development for the country.”


Making analytics a business priority
One would be hard pressed to overestimate the value that BI and analytics can offer Asian payments participants. Indeed, with massive growth forecasted in Asia’s payments volume, the region is uniquely positioned to drive the understanding and use of Big Data in the payments industry on a global scale.


Immediate action, however, must be taken to achieve this goal. Across Asia, banks and payments providers will now need to start developing an actionable and achievable plan for turning their Big Data into big value through an effective BI strategy. This, in turn, creates a number of tactical projects that break the Big Data problem into bite size chunks. And while the journey to a BI ‘end state’ may involve a number of tactical solutions, the alternative is to risk drowning in the data deluge that is surely coming.


What to expect at Sibos


Attendees at this year’s Sibos event in Japan will find that Big Data looms large on the agenda of all major banks and payments providers. Participants from Asia would be well served by not only attending sessions related to BI, but also by networking with their peers from other regions and BI service providers to clearly ascertain the opportunities and challenges posed by data analytics within the payments industry.