Data aggregation tools like those offered by Envestnet | Yodlee are helping banks attain an improved return on investments and enhanced customer experience, as financial institutions using the tool saw a 416% return on investment following a three-year period ending in January.
In addition, banks using Envestnet | Yodlee saw a net present value of $94.1 million, according to a recent report published by research firm Forrester and commissioned by Envestnet.
But while most banks prioritize having data at the fingertips of decision makers, it has not always been a simple process, Christine Barry, head of banking, payments insights and advisory at research group Aite-Noverica, told Bank Automation News.
Being able to view a totality of customers’ bank accounts to make instant decisions on high-value transactions has become a must for many FIs, she said.
“For a bank, the benefit of account aggregation is that it makes it easier, for example, if [a customer] is applying for a loan, they have that 360-degree view of the customer in a single location,” Barry said. “It makes approving that loan a lot faster, because a lot of the information is there, as opposed to having to go to all different locations to collect it.”
Understanding data is challenging, but that’s where analysis and aggregation can come in, Lekha Banerjee, technology executive at Truist, said earlier this month at Bank Automation Summit U.S. 2023 in Charlotte, N.C.
“When we talk about data, it’s a lot of fancy charts and a lot of numbers out there,” she said. “But what does that number mean for your revenue goal? What does the data, that we collected and analyzed, what does it mean with respect to your next best action?”
Advancement in data aggregation
Yodlee assembles data that is spread across areas such as investments or managed assets to build models so that banks can more easily make decisions about loans or mortgages, Envestnet President of Data and Analytics Business Farouk Ferchichi told BAN.
“That data is noisy; it’s not intuitive,” Ferchichi said, adding that the company has built more than 50 data science algorithms using AI and machine learning to glean insights and present them to partner financial institutions.
As data aggregation continues to evolve in banks, the next development in this area is incorporating additional analytics to give more insight into making business decisions, Aite-Noverica’s Barry said.
“The first step is getting a richer picture of the end user, their financial position. The next step is to incorporate analytics to take that data and draw insights from it and be able to make recommendations,” she said.
Some of Envestnet’s banking clients include Harlingen, Texas-based Texas Regional Bank; Grand Forks, N.D.-based Alerus Financial; Northbrook, Ill.-based Centrust Bank, and Warsaw, Ind.-based Lake City Bank, according to an FI Navigator report.
Data aggregation in action
Citi Treasury and Trade Solutions’ use of data insights and analytics has uncovered areas of growth in revenue and improved customer experiences.
“Over the last few years, Citi, particularly TTS, has invested significantly in data for our clients because in the world of increasing complexity, decision makers need data to drive decision making,” Naveed Anwar, managing director and global head of digital at Citi Treasury and Trade Solutions, told BAN in an episode of “The Buzz” podcast.
More recently, Citi has used data to “identify, forecast and manage our risk exposure,” he said. “In the recent events that have been taking place in the market, TTS was able to leverage real-time account balance and data to migrate and mitigate any of our risk exposures and make informed decisions to avoid current market instability impacting our balance sheet as well as looking for the best interest of our clients.”
Data aggregation technology can be a strong differentiator for banks in keeping existing customers and potentially attracting new ones, Barry said.
“Having a financial institution that’s able to pull everything together to analyze it and to be able to make recommendations is so valuable to them,” she said. “It’s not something that they’re being offered today by a lot of institutions. The more value you provide to a customer, whether they’re a consumer or a business, the more likely they are to give you more of their business.”
