The exponential growth of digital transformation, e-commerce and digital payments have led to a proliferation in the amount of data collected. Some argue that data is the new currency. As financial institutions and payment organisations seek to differentiate and survive in a very competitive market, using data to generate new revenue streams is the focus of many strategy discussions. The digital payments market was valued at USD 7.36 trillion in 2021 and is projected to be worth USD 15.27 trillion by 2027.
This paradigm shift towards data-driven services, real-time analytics and personalised products makes data a key asset. The burning question is: how to monetise that asset? The answer is unique to each business; every company must find the right ways to monetise its data, based on its strategic vision and the use cases that would bring the most value to its business or individual markets. Gartner describes the data value proposition perfectly: “it’s not enough to simply have data. The value of data comes from the insights it creates, the processes it optimizes and its ability to enable better decision making”. For global financial institutions and payment providers that have a wealth of payment data, getting their data strategy right is key to unlocking the revenue potential.
THE DATA REALITY
The reality is that many organisations’ data is unstructured and stored in legacy monolithic platforms; it is siloed and disparate, and there is generally no one view of data across the organisation, akin to a ‘data swamp’. This leads to inefficiencies, data duplication, higher costs and it limits innovation as it is difficult to access or make sense of the data in a meaningful way. As a result, we have heard clients say, “I am trying to develop a new product, but I don’t trust the data. It is in several different systems that don’t speak to each other, and I cannot get an accurate view across the business”. The moral of the story is that the product or service is only as good as the accessibility and quality of the data.
A HOLISTIC STRATEGY IS KEY TO SUCCESS
Data monetisation promises to be a differentiator and is becoming a key strategic priority for global organisations. The first step is to get the business ready by building the foundation to deliver the agility, flexibility and scalability needed to respond to changing consumer demands for data-driven products and services. Now is the time to develop a holistic data strategy that stretches across the organisation – vision, people and skillsets, operating model, data governance, tools, technology, infrastructure and architecture.
Aligning all data from across the business into one unified data layer will provide one source of truth for all data needs, making it easily accessible for business intelligence, reporting, data analytics, artificial intelligence (AI), machine learning (ML) and predictive decisioning. With the right strategy, a strong foundation, a clear business readiness approach and a holistic view of the data, identifying the use cases that would drive value for consumers and partners will become more apparent. This will future-proof the business and prepare it for winning.
CONSIDERATIONS FOR DATA MONETISATION
Business and technology transformation takes time, but there are things that can be done now to start the data monetisation journey. Open Banking and ISO 20022 are two major changes that will have a significant impact on data strategies in the next few years. Orchestrating data in an optimal way will make it more readily available and meaningful for use in real-time analytics, actionable insights and for sharing with third parties. The most synergistic approach would be for companies to focus on their core competencies and outsource the rest to a trusted partner, but this will depend on the defined strategy.
Some projects that could be outsourced are:
Open Banking: Financial institutions and payment providers must clean and enrich existing data, making it actionable and trustworthy, to capitalise on data sharing agreements with third parties. Having a secure, robust open API infrastructure will optimise the sharing of data and enable the delivery of a vast suite of services via third-party providers. One use case for monetisation could be faster onboarding of customers and merchants using Open Banking data and APIs to perform anti-money laundering (AML), know your customer/business (KYC/KYB) and credit risk checks in real time. Another one is real-time affordability checks for Buy Now Pay Later (BNPL).
ISO 20022: All major financial market infrastructures will be migrating to ISO 20022 by November 2025, so this should be at the centre of payments data monetisation strategies. It will bring standardised financial messaging, increased interoperability and a wealth of data that could drive revenue, either as value-add services or new data products. Richer data will make fraud detection and prevention easier with predictive analytics, using AI and ML to pre-empt fraud. It will also enable more meaningful actionable insights to help solve business challenges and make strategic business decisions.
Data Orchestration: This automates the process of gathering, preparing and transforming data from numerous storage locations across databases, data warehouses and data lakes, making it easier for data analysis tools to access the data. As mature organisations adopt a multi-cloud strategy, data orchestration across clouds, frameworks and storage systems could make data more easily available for real-time analytics and insights, which could create new revenue streams.
Data Analytics: Using data analytics with AI and ML to generate insights into consumers’ purchasing behaviour and offering products that drive consumer experience and engagement is key to driving monetisation – for example, personalised products, loyalty offers, targeted marketing. Organisations can also use actionable insights to get a full view of their businesses to aid strategic decision making. These insights can be monetised either internally or via third parties, generating revenue through new products and cross-selling.
THE DATA REVOLUTION
Data is not only the new currency, but – to coin a phrase – data is the new constant! As the world continues to digitalise, the pace of cloud computing grows and consumers demand more analytics-driven and personalised products, companies will accelerate the use of AI and ML to extract value from data. Data monetisation through embedded analytics to create insights, customised reports and dashboards will become the norm. Better data management and governance, improved quality and security, strategic data platform modernisation and robust APIs will be the cornerstones of this data revolution.
THE FUTURE IS OPEN
With the migration to ISO 20022 and Open Banking requiring financial institutions to share their data with fintechs and other third-party providers, they should use this opportunity to modernise their data platforms and prepare for the prospects of an open data future. Choosing the right technology partner could help smooth the way – one with market awareness, the right mix of technology and domain knowledge and the enthusiasm and experience to successfully deliver innovation.
In a world that is progressively becoming mobile-first and data-driven, where consumers expect fast, frictionless payment experiences, those that can manage and monetise real-time data will ultimately win.
VP & Principal Industry Consultant, PaymentsAnnmarie is a Payments leader with 25+ years of experience in Payments, Banking, and Fintech. Passionate about payments innovation, she specialises in payments processing, solution delivery, and consultancy. With an MBA in business and expertise in technology, she is a trusted advisor to clients, who appreciate her ‘big picture’ view. Before joining Endava, Annmarie held senior technical and leadership roles at Visa and other global payment organisations, delivering innovative solutions for clients across Europe, the US, Asia Pacific, and the Middle East. Having lived in the UK, the US, the Caribbean, and travelled widely across Europe, she is truly a global citizen. When not working, Annmarie enjoys nature, walking, travelling, and spending time with family, while also making time for her mentoring work with university students in London.
16 November 2023
Hi, I’m Matt Cloke
20 September 2023
What Businesses Need to Start Innovating
24 August 2023
Resetting the Status Quo – How Banks Can Overcome Payments Challenges
08 August 2023
How Healthtech Simplifies and Secures Payments Processing
14 July 2023
Streamlining Digital Media Supply Chains with Generative AI