Unlocking Growth: 5 Compelling Reasons to Invest in Your Data Analytics Strategy

More than a line item, banks can’t afford not to prioritize data analytics. 

In Bank Director’s 2024 Technology Survey, 80% of community banks are considering increased investment in data analytics and 66% in artificial intelligence. Yet, the current utilization of data paints a mixed picture. Only 11% of respondents reported extensive data use across decisions and areas of the bank, believing their strategy surpasses that of peers. Meanwhile, 40% use data in several areas but see significant room for improvement, 34% are in early stages of developing their data strategy, and 16% admitted to having no strategy at all. 

As banks face a rapidly changing economic landscape and heightened competition, investing in data analytics is no longer optional. It’s a mandatory strategy for unlocking new opportunities and achieving sustainable growth. 

Amid brisk competition for resources, here are five compelling reasons to invest in a robust data analytics platform: 

1. Drive Growth and Profitability 

Investing in data analytics is essential for driving growth and profitability. By democratizing data and making it accessible across all levels of the organization, banks can empower teams to make informed, data-driven decisions daily. This accessibility enables frontline staff to better understand customer needs, identify cross-selling opportunities, and optimize daily operations. 

With 90% of financial institutions planning to target niche markets within two years, a robust data analytics platform becomes even more critical. Community banks can identify and effectively serve specialized segments — whether focusing on small businesses, underserved communities, or unique demographic groups. Tailored offerings and marketing strategies resonate deeply with these audiences, differentiating banks in a crowded marketplace and driving growth by capturing lucrative, under-served segments. 

2. Optimize Operations 

Banks today are awash with data, but if that data is dispersed across disparate systems, its potential value diminishes. Investing in a unified data strategy transforms this challenge into an advantage. Consolidating data into a single source of truth streamlines operations, uncovers inefficiencies, and enables automation across the organization. This integration provides executives with a comprehensive 360° view of their institution, ensuring consistent standards across departments. The result? Cost savings, optimized resource allocation, and scalable operations without proportional cost increases. 

Real-time access to unified data empowers leaders to make daily, data-driven decisions. By eliminating manual processes and focusing on strategic opportunities, banks can enhance efficiency and scalability. For instance, FVCBank, a $2.2 billion bank, reported a 27% increase in month-end efficiency by eliminating 450 hours of ad-hoc reporting with KlariVis. 

3. Grow a Data-Driven Culture 

Data-driven insights can transform every department within a bank. When accessible and transparent, data unites teams, aligning efforts and ensuring everyone moves in the same direction. This fosters a culture where data guides every decision and encourages collaboration. 

In the ongoing competition for deposits, frontline employees need real-time insights to make informed decisions. A coordinated, data-driven strategy enables swift actions, enhances resilience, and creates a shared sense of success. Cultivating this culture drives sustainable growth and strengthens a bank’s competitive edge (more on this below!). 

4. Mitigate Risks 

Navigating today’s financial landscape without robust data analytics is akin to steering a ship without a compass. Data analytics offers actionable insights into risk exposure, enabling banks to monitor factors like credit concentrations, portfolio diversification, and liquidity. Continuous analysis identifies vulnerabilities before they escalate, reducing costly disruptions. 

Additionally, data-driven decision-making enhances transparency and accountability. Clear, auditable data builds trust with regulators and strengthens governance. Proactive risk management practices safeguard a bank’s stability and ensure long-term success. 

5. Gain a Competitive Advantage 

In today’s fast-paced environment, gaining a competitive edge requires anticipating market changes. A data analytics platform provides real-time insights into emerging trends, enabling banks to identify and act on opportunities faster than competitors. This agility drives innovation and strengthens market positioning. 

Leveraging customer insights also allows banks to craft personalized experiences, improving satisfaction and loyalty. In a rapidly evolving industry like community banking, a data-driven strategy ensures sustained growth and differentiates banks from disruptors and traditional competitors alike. 

There’s No Time Like the Present 

As banks increasingly recognize the transformative potential of artificial intelligence — 66% are eager to invest — it’s crucial to understand that this journey begins with a reliable data platform. Data is the bedrock of AI; cleansing, analyzing, and leveraging data is foundational for harnessing AI to enhance customer experiences, boost productivity, and drive growth. Without robust infrastructure, AI’s effectiveness is severely compromised. 

For banks like Merchants Bank in Minnesota, investing in a centralized data analytics platform has been a game-changer. A solid data platform is not merely a line item but a cornerstone for innovation and long-term success. Don’t miss the opportunity to build a reliable data foundation — your bank’s growth depends on it.