The Power of Data Storytelling
Across every industry, data analytics is a top priority. In fact, the global data analytics market is expected to reach nearly $347 billion by 2030 – a 30% increase from 2022.
This surge is for good reason. Data allows organizations to gain better insight to transform the customer experience, inform and empower strategic decisions, support risk management efforts, and understand emerging trends.
But data alone doesn’t change behavior and lead to action; emotions do.
Understanding data storytelling
At its most basic function, data storytelling is the practice of building a narrative around a set of data and supporting visualizations to help convey the meaning of that data in a powerful and compelling way. It’s the difference between reading numbers on a spreadsheet and bringing that data to life.
By simplifying complicated information and making it digestible, individuals better understand the data. If constructed well, it inspires action and empowers individuals to make critical decisions quicker and more confidently
The psychology behind data storytelling
Storytelling dates back to the Cro-Magnon era. While we’ve moved far beyond cave paintings, the psychology behind it remains the same: the human brain prefers stories over numbers.
This is because the human brain consumes massive amounts of data, processing as much as 74 GB each day – the equivalent of watching 16 movies. To prevent information overload, the brain constantly filters what’s important to process and remember and what can be discarded.
Stories win over raw data. They’re more memorable and engage the brain in a way that numbers do not. First, the brain lights up and begins to process the story to relate to their own experiences. Neurons then mirror between the story itself and the person receiving the information, which plays a role in empathizing.
Dopamine is then released, resulting in easier and more accurate recall. At the onset of processing facts, both the Broca’s and Wernicke’s areas – which control language comprehension – are activated.
What does this all mean?
With data storytelling, a person can evoke an emotional response on a neurological level to ensure that their points are remembered and acted upon.
The three elements of data storytelling
How can banks tell compelling data stories? It starts with three main elements.
At the core of data storytelling is the data itself. Banks have no shortage of data but are often paralyzed by antiquated and siloed processing systems and the inability to efficiently access that data.
Consequently, teams spend countless hours manually extracting and compiling data from various systems. Not only is this inefficient, but it’s prone to human error.
Further complicating this challenge is that each team and department is pulling their own sets of data, as well as manually manipulating that data, leading to inconsistent information across the institution.
Because of this laborious process, teams are also compiling information as-needed. This might be once a year or less, meaning teams are operating with inaccurate and outdated information.
To engage in effective data storytelling that encourages the right action, data must be accurate, complete and consistent throughout the organization. If banks start with dirty data, decisions made and actions taken could be more harmful than helpful.
And at the end of the day, data alone is just data.
2. Powerful Visuals
To make the story clear and memorable, visual representations play a significant role. These can be charts, graphs, diagrams or infographics, helping to enlighten and engage the audience and turn data into something simpler and digestible.
Data visualizations should help reveal patterns, trends and other findings from an unbiased viewpoint. It should provide context, interpret the data and articulate insights to help teams make meaningful decisions.
An effective way to do this is through a data dashboard. By organizing and displaying important information in an easy-to-understand format in a single location, teams can quickly interpret complicated metrics to help build a compelling narrative.
As examples, teams can gain better visibility into past and current trends, empowering them to forecast future trends with greater accuracy. Teams can also leverage up-to-date customer analytics to enhance and transform the customer experience and increase customer profitability.
3. Compelling Narrative
Narratives, also called storylines, help communicate insights gleaned from data, providing context and meaning to then support recommended actions.
A compelling narrative combines data with powerful visuals to paint a clear picture. It helps the audience understand complex information, gives meaning to it, and then helps inform and empower strategic decisions.
Without a compelling narrative, data becomes numbers and visuals are just charts and graphs. The narrative is what compels action.
Creating a data narrative follows the same elements of any other story. It needs characters, a setting, conflict and resolution.
For instance, a bank may review all its single product loan customers and find that PPP loans are nearly double any other loan category, therefore presenting the greatest opportunity for cross selling.
Rather than showing a spreadsheet of loan totals across each category, a compelling narrative paints the picture of Maria, the owner of a small coffee shop who took out a PPP loan during the pandemic through a community bank other than her primary institution.
Today, however, Maria is worried about the economy. Inflation is soaring and she’s struggling to keep up. Rather than waiting for her to call the bank, a relationship manager proactively calls her. It turns out, Maria needs a line of credit to relieve her from temporary price increases of coffee beans.
Not only did the bank help her, but they’ve now built a relationship with her. Maria is considering moving her other accounts to the bank. How many other “Marias” does the bank have as a single product customer who would be willing to expand their relationship now that they’ve helped save their business? That narrative hits a little differently than looking at a spreadsheet during a Monday morning meeting, doesn’t it?
Maria’s story is just one of many ways banks can leverage data storytelling and bring data to life. The benefits extend far and wide. By combining data, powerful visuals and a compelling narrative, teams are empowered with strategic insights, helping to drive profitability and improve productivity at every level of the organization.
Amber Robinson is a Sales & Strategic Partnerships Executive at KlariVis. For more information, visit www.KlariVis.com.