Data has already transformed many businesses and created new ones, what each has in common is a step change investment in unlocking the value of your data. Without this, your business is at risk of failing to meet customer and community expectations, handing market share or profitability to competitors that do. Elise Fairbairn, Managing Director of Transaction Banking Solutions at The Commonwealth Bank, explains why.
Data is an asset that can drive your business to new heights. Used effectively, it can deliver an array of opportunities for revenue-generating growth, customer service and employee satisfaction, thanks to increasingly cost effective and predictive analytics.
Whilst earlier Insight papers discussed how data left inadequately protected makes an organisation non-compliant with regulatory and privacy laws, and exposed to reputational damage and fines, the evidence is growing that under-investing in data holds a greater risk to your business.
Data is now ubiquitous – with most reports saying that >90% of the world’s data has been created in the five years since 2015. Importantly, the International Data Corporation (IDC) estimates that by 2025, every connected person in the world (which will be about 75 percent of the population) will engage with digital data more than 4,900 times per day – that’s about once every 18 seconds.1
Where does it all come from?
According to a report from the ACCC, for the three months to 31 December 2019, Australians download on average 7.7 gigabytes (GB) of data every month on personal mobile devices, and for the average home it’s 277 GB.
In an Australian report covered by the AFR on 20 October, Telsyte showed demand surged in June and July (as many of us worked from home) for home security cameras, video doorbells and smart locks, with Australians now averaging 19.7 internet connected devices in the home (up from 18.9 a year ago) and predicting that by 2024 the average household, will host 35.6 devices, that’s 371 million devices in Australian homes.
The amount of data being created, stored and analysed is growing at an increasing rate, but the key message is that the largest part of that growth is not from we as humans, but our connected devices, commonly called the Internet of Things or IoT.
In a recent example of devices generating data, Radio Frequency ID (RFiD) wrist bands (originally developed to warn workers away from dangerous machinery), were re-purposed to vibrate when workers are too close to each other. The wrist bands generated data for 3 billion encounters, which when analysed showed the average worker had 300 interactions closer than 6 feet and lasting longer than 10 minutes. Deploying the technology reduced ‘unsafe’ contact by about 65%.
Analysis of the data collected provided the insights, which are truly transformative for a business. It shines a light into every corner and crevice in an organisation and is increasingly used to predict and prevent things that are yet to happen.
Where are you on the journey?
The first challenge is recognising the data your business already holds, where it is stored and how it can support, improve or influence decisions. Traditionally, financial records captured in accounting or Enterprise Resource Planning (ERP) software was the source of business data and whilst leading providers strive to be the one platform to consolidate data and deliver insights, the amount and value of data has exploded well beyond finance.
Once you identify all the data sources and have access to it, the information is often in different formats or has no common references, requiring it to be cleaned or manipulated, and in the worst case scenario, data captured on paper needs to be converted to digital. After being sorted and perhaps combined with external data, analysis can begin. Rather than a one-off exercise, best practice has been to ensure that ongoing and new data sources are delivered with a common reference, if not format, regardless of how frequent or irregular delivery is scheduled.
On-premise storage of data is often referred to as a “data warehouse” and is accompanied by a set of tools and dedicated specialists to run queries, extract meaningful insights and importantly ‘audit’ and test the same, to ensure its efficacy, all before allowing it to influence a business decision.
Technology has recognised and is rapidly reducing the time and cost to transform data into immediate business value – in just a few short years, data is now commonly being moved to and stored in the cloud. Known as a “data lake”, businesses and governments are benefitting from the immensely scalable power of cloud computing and continually improving integrated tools, such as artificial intelligence and machine learning, which not only locate and organise data, but analyse, spot patterns and derive key insights – from increasingly large, complex and disparate data sources.
The next wave of data capability has already broken on that virtual shore with leading organisations developing ‘Digital Twins’, data driven virtual replicas of everything from buildings, businesses, communities and entire cities. Australia Post is building a twin of its entire delivery network, with its General Manager of Data Science and Strategy stating that whilst often used to model the impact of change, “…we’re thinking about it more as a grid, so three layers – an intervention layer, a forecasting layer and a simulation layer, and then interaction zones – an interaction with our retailers, an interaction with ourselves in the network, and then an interaction with our customers.”
In a recent study of how businesses responded to the pandemic, London School of Economics researchers noted that “…… organisations will emerge more technologised than ever before, but some will be much better placed competitively than others, perhaps irreversibly so, partly because of their technology policies before and during the crisis, and their good luck in being in the right sector at the right time.”
Improving business operations
Data, its analysis and insights deliver new business opportunities. Perhaps one of the older and most proven is Google, demonstrating how to monetise the collection and analysis of vast amounts of data for profit. And whilst few will reach their lofty success, every business benefits from more relevant and timely information.
And there are examples across the business spectrum; when supply chains were disrupted during the pandemic, a resources giant turned to advanced analytics to future-proof its supply.2 At the International Mining and Resources conference late last year, they confirmed artificial intelligence (AI) helped them gain visibility of the multiple tiers of its supply chain. Sharing that data with a variety of suppliers helped them firm up the role they played in the market and together create a more resilient supply chain.
In agriculture, our largest wine producer turned to data analytics late last year to help it predict when to plant, irrigate, feed and harvest its grape crops. Over the next three years it will use agricultural technology (AgTech) overlayed by detailed weather forecasting to assist in making production decisions.2 In the Australian Financial Review report last year, the wine industry had an error rate of about 30 per cent using existing methods, but could slash that by more accurately predicting when to harvest to get maximum product.
One insurance group is using its vast claims data in conjunction with an AI natural language processing tool to review vehicle assessments and conversations with customers to reach faster conclusions about whether a damaged car will be too expensive to repair.
Improving customer service
Data has become essential to customer service. ‘Chat Bots’ are becoming commonplace, using deep historical data and technology to supplement human operators in call centres. The pandemic has accelerated their use and capability continues to grow, answering increasingly complex customer questions.
One of our major telcos recently reported that customers are pleased with the service and during the pandemic the percentage of customers using digital self-service rose from 70 to 84 per cent.3 Since it was launched, 3.5 million interactions with its bot means it is now looking into how AI can further enhance data analysis through language recognition.
Customer service is one area in which smaller businesses can benefit from the data revolution. Website and mobile data for a small online retailer, for instance, can identify pain points on the customer journey, hotspots on the site, popular stock, plus preferred contact, payment and delivery methods.
The reducing costs and increasing benefits of cloud storage with scalable power, combined with AI driven solutions are now available to all levels of businesses and government.
The risks – beyond privacy and cyber attacks
If not for the pandemic, cyber and data security would arguably have headlined as a key concern for business and remains a clear and increasing risk to manage. For some, moving data to a reputable cloud storage provider will not only deliver increased protection, but provide access to solutions that solve many of the issues with legacy data.
To overcome the unstructured nature of data, technology companies are rolling out cloud-based tools to help companies track the location of their data and learn exactly what the data is. Microsoft has developed a tool that allows companies to understand their risks around privacy by using more than 100 AI classifiers that automatically look for personally identifiable information, sensitive data and pinpoint out-of-compliance data.4
Similarly, regulation technology, or reg tech, encompasses tools that businesses can use to ensure their data complies with regulatory requirements. Data61, the digital and data arm of Australia’s national science agency the CSIRO, used a new reg tech tool – natural language recognition – to automatically read PDFs and enable millions of documents to be assessed for compliance with changed accounting standards .
But these are not the only risks. As climate change ushers in profound structural change in many industries, C suite and business owners must focus not only on their own business, but also on those in their supply chain. The enormous explosion in and use of data, continues to drive exponential growth in cloud storage providers or Data Centres, with the International Energy Agency reporting data networks accounted for 1 per cent of global electricity use in 2019. Whilst quantum computing efforts promise to process oceans of data and deliver predictions in time frames far shorter than possible with existing computing capability, the energy use is greatly increased. Just as Australia’s first carbon-neutral telco supports individuals to calculate the carbon cost of their data, so too will businesses need to consider the impact of their use of data.
Globally, the greatest concerns are with the potential for bias in data and the algorithms built to spot patterns and deliver insights. As the authors of ‘Prediction Machines: The Simple Economics of Artificial Intelligence’ put succinctly: “…. artificial intelligence does not actually bring us intelligence but instead a critical component of intelligence — prediction. ….Prediction is the process of filling in missing information. Prediction takes the information you have, often called ‘data,’ and uses it to generate information you don’t have.” Even the most advanced machine learning algorithms are mathematical models, with the risk that bias is present in data itself or the algorithm leading to outdated or inaccurate predictions. This has led to increasing calls for the predictions and the decisions we make based on them, to be auditable and explainable.
If you invested in data long ago like Google, you may already be reaping the benefits, and if you have yet to start, the costs and benefits of doing so have never been better.
How can the Bank help?
If you want more evidence of the value of data, CBA provides Daily IQ to our business clients using CommBiz, which analyses their transaction data to deliver insights. Our Daily IQ Cash Flow tool is the most frequently used, to compare historical and current cash flow. The Busiest Times tool provides a heat map showing the busiest times of the day based on card sales data, helping businesses with staff rostering and stock control. For more information, visit Daily IQ.
It is CBA’s market-leading proprietary transaction data which delivers far greater certainty than the limited insights available from surveys. Data underpins our highly regarded bespoke analytics capability, which can be combined with a client’s data and other public data sources, aimed at delivering clear, actionable insights. Available on a case-by-case basis, each data project is tailored to unique requirements and specifications, beginning with a scoping session provided by the Bank’s Client Consulting Team.
Need support identifying or solving for data opportunities in your organisation? Our Consulting Team also deliver Design Thinking workshops to our largest clients, which use a proven framework to understand any challenge, and develop potential solutions with your people, from a seamless data-driven customer experience, to what your business looks like post Coronavirus.
Data has the power to transform your business. Contact your CommBank relationship manager for more information on how to make your data work for you.
About the author
Elise Fairbairn is a highly experienced banking executive having spent the past 27 years leading Institutional Bank teams in Sydney, London and New York. She is currently Head of Transaction Banking Solutions at Commonwealth Bank where she manages and guides client solution and integration teams in the domestic and international market.
Elise believes creating a Group-wide strategy that places the customer at its heart is the key to best banking practice and it’s a strategy she has implemented with great success during her extensive career.
Elise is also a member of the Australian Institute of Company Directors, and a director at the Fosters School of Business Global Bankers Program Advisory Board.