Legacy technologies – including siled data and IT infrastructures – are hampering banks’ ability to improve product innovation, with many institutions in “catch-up mode” as they work to improve their customer service offerings.

“As we know, retail banking customers are more tech-savvy than ever before,” said Cindy Maike, vice president of industry solutions at Cloudera.

“Expectations are higher and they are looking for their bank to deliver a range of services and customer-focused experiences that emulate those provided by other mainstream consumer service providers such as mobile and e-commerce businesses.”

And while neobanks like Xinja are the obvious contender in the data space, big tech companies are also making waves. Apple and Goldman Sachs have already launched the Apple Card, while Amazon and Uber are also considering moves that could make them rivals to the biggest banking institutions.

"Banks need to become data-driven," Ms. Maike said.

"Successful data-driven banks are those that can move beyond the data that resides within their own organization and acquire external data sources that [provide] a more holistic and stable view of their customers. Alternative data has become a significant industry that can provide new insights into customers, products and markets, leading to the potential for significant competitive advantages.”

However, there are several regulatory and cultural hurdles to overcome as banks move to data-driven enterprises. Many financial organizations are limiting their cloud-based capabilities as part of a risk-averse approach, while digital transformation and systems automation can enable entirely new types of financial crime typologies, exposing firms to unexpected losses or regulation.

"Innovation in regulation and compliance is also extremely important," said Ms Maike.

“This should not be seen as a one-off, field-check exercise. Instead, regulatory changes are opportunities not only to meet requirements, but to integrate them into the business as a value-added opportunity. Whether it's to protect business or to open up previously restrictive environments, change is good.”