The BIG DATA MYTH...

How do you know a person well enough to understand their motives, their actions, their aspirations and needs? It can be difficult even among friends and relatives one has known for years, let alone for a financial institution with hundreds of thousands of customers. Some people say it's impossible for a large bank like Citi or Bank of America to really know its customers.

Yet the amount of publicly available data about each and every one of us grows all the time, to the point where an organization with the will, the patience and the right software can analyze in detail our financial transactions, our habits, our political leanings, our preferences and our geographic location, among other things.

Banks have been analyzing their customer data for decades, most thoroughly in the credit card business, searching for signs of fraud, willingness to upgrade to a new product or propensity to leave for a competitor. Today, many banks have projects under way to pull together customer data from all channels - branch, ATM, online banking, mobile banking, call center, social media sites - in one place, to mine that data in real time and use it to cross-sell, up-sell, detect fraud and keep customers in the right products. There are six trends guiding such projects.

1 The Big Data myth. The trendy phrase "Big Data" refers to data sets that have grown so large and complex that they become awkward to work with using standard database management tools.

Data volumes undoubtedly increase all the time. IBM estimates 2.5 quintillion bytes of data are created every day from a variety of sources including sensors, social media, and mobile devices around the world. IDC estimates the market for "big data" technology and services will grow at an annual rate of nearly 40 percent to reach $16.9 billion by 2015.

One bank customer recently described banks' data challenge to Boxley Llewellyn, global retail banking director at IBM, as "being in a big room full of data that's a little dark, so sometimes data gets trapped in a corner and sometimes it can't be found quickly enough. A wind of streaming data, social data and unstructured data is knocking at the door, and we're starting to let it in. It's a scary place at the moment."

But the idea that businesses need to store, mine and analyze every scrap of the customer data they collect is not practical.

"A lot of times when analytics and engineering people ask the business people what data they want, they get this answer back: collect everything and we'll sort it out on the back end," says Joseph Stanhope, senior analyst at Forrester Research. "That's not a data management strategy. There is too much data from too many sources coming at us too quickly for us to just save everything forever. You do need to be discerning about what data the business uses, which data goes to a KPI that shows us if we're moving the business forward. If people can't articulate what they need up front, they're not going to pick it up on the back end."

Gaming companies, for instance, don't mindlessly store all the data they collect on gamers, he observes. They curate the data to understand what is useful and what isn't, and create data hierarchies, schemas and categories to manage, condense, add and change information. "To understand this is more than technology, it's about people in the organization and the culture," Stanhope says. "If you can't evolve and change what you curate, then you do have to store and collect everything and business passes you by."