Does Big Data Adoption Enhance Competitive Advantage in Commercial Banking?

Abstract

The paper explores whether the use of big data contributes to the competitive edge of commercial banks, analyzing a substantial number of secondary sources, which include scholarly articles, industry reports, and empirical case studies. Literature analysis shows that commercial banks are resorting increasingly to massive data, sophisticated analytics, and automated intelligence to enhance customer interaction, credit-risk, fraud detection, and efficiency in operations. Companies that manage to implement analytics in their fundamental operations have in most cases, recorded notable gains in their profitability, service delivery, accuracy of decisions and risk management. Such improvements in performance help in the creation of longterm competitive advantage, especially in industries that are typified by the existence of digital competition and ever-changing customer demands. The results also indicate that big data does not bring an advantage by default. The measures that are strategic alignment, organizational culture, availability of talents, technological infrastructure/underlying governance structures play a significant role in determining the effectiveness of analytics initiatives. Without such capabilities, banks may not be able to achieve the full potential of big data and hence imbalances in digital maturity will emerge in the sector. The secondarydata method, whereas giving a general overview of the said dynamics, does not offer the necessary access to proprietary data that can cause the establishment of causal relations unconditionally. In general, the study takes the view that big data is an effective facilitator of competitive advantage provided it is by well-organized organizational preparedness and integrated analysis abilities.