While it’s now a given that most businesses are using data to inform decisions, evidence is mounting that the way data is sourced and used is having a material effect on financial performance.
“We’ve moved from a ‘nice to have’ to a ‘must have’ for businesses to harness the power of data to remain competitive,” says Jade Clarke, head of Westpac DataX, the bank’s data analytics business.
“And those tapping into external data assets to supplement their own internal view – and integrating it into their workflows – are taking the upper hand in a way that’s directly attributable to bottom-line improvements.”
Backing this view is a recent report by Deloitte which found every step up the so-called “data maturity ladder” can lead to 9.5 per cent higher revenue every year for Australian and New Zealand businesses. Meanwhile, MIT Centre for Digital Business reports that businesses making data-driven decisions have 4 per cent higher productivity than those that don’t.
Clarke says the key to this uplift is a business’ ability to apply data in operational decision-making about where to invest to increase returns.
“For example, having a timely view of which advertising channels are getting the best returns, which geographical areas you should prioritise for marketing spend, where are your highest revenue generating customers spending, when you should have your staff on and where,” she says.
“All of these insights support analysis to make decisions confidently that may allow you to change your direction quickly to gain competitive advantage,” she says.
Although most organisations are going through the process of better utilising their own internal data, Clarke says those benefiting the most are the businesses leveraging external data sources.
“They realise that by tapping into third-party data sets they can generate more value instantaneously because no matter how much they optimise their internal data, they will never get the data insights that a third-party like Westpac DataX can provide,” she says.
Westpac DataX, which was launched in June after 18 months of development, draws on de-identified data sourced from across the bank’s operations, such as the 6 million-plus daily credit card transactions.
While initially provided as a service for existing customers of Westpac’s institutional bank, Clarke says it is now a standalone business with a steadily growing base of private and public sector clients, including those with no existing relationship with the bank.
Westpac is among a growing number of big businesses stepping into the realms of data commercialisation as a new revenue source beyond traditional offers. Others include DSpark, the Singtel Group’s global data arm in Australia specialising in mobility intelligence; and the Data & Services arm of Mastercard.
“What our data can do is to close a really significant blind spot for a client on their market share and consumer share of wallet,” Clarke says.
“A business can see their own sales data, but they can’t see near real-time data about how that compares to competitors in their sector. It's relatively simple in its concept, but it can be transformative in the decisions they make.”
She says this type of data has become increasingly important since the COVID pandemic introduced “extreme volatility” in spending across all sectors, reducing the reliability of legacy tools used to forecast demand and supply.
“COVID rendered organisations’ past learnings outdated as an entirely new set of consumer, business and government behaviours emerged without historic precedence,” Clarke says.
“Using the most timely and complete data available such as weekly card spend data for monitoring and benchmarking has become an essential tool to measure performance and predict demand and supply trends.
“Our analytics reflect growing recognition that unless decision-makers understand what the data is revealing, and how to operationalise those insights through effective problem-solving and meaningful next steps, then it has limited strategic value.”