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Customer-Centricity in Finance Starts With Data

The use of data is integral to financial services' ability to tailor experiences to their customers — an incredibly valuable tool in an increasingly competitive market.

Posted: 26th November 2020 by Finance Monthly
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James Johnston, Regional VP at Cloudera, presents a case for greater utilisation of data by banks and financial services firms.

For those who master the art of delivering customer service in financial services, there are huge rewards — including 55% higher returns for customer-centric banks. However, the financial services market is highly saturated, and challenger banks, of which there are 102 in the UK alone, are rivalling legacy institutions when it comes to giving consumers choices. In fact, Starling Bank, which only opened its doors in 2014, came out on top as one of the brands in the UK excelling at customer experience. So, how can financial institutions improve customer experience and remain competitive? One word: data.

True innovation lies in data

Organisations in the financial sector need to use data and analytics to offer their customers the most relevant products and services proactively. Currently, they do this by looking at traditional data sources, such as account activity, loan requests and investments. This helps these companies to form a complete understanding of the customer and their needs. However, for some banks, it is often here where their data analytic capabilities come to a halt. And it needs to change, as it is leaving them with only half the picture.

Today, there is a wider range of data sources available to banks than ever before, fuelled by the increasing amount of data we are producing. For example, unstructured data sources, including clickstream data, location data, social media streams and chatbots can provide a wealth of actionable intelligence. But by only analysing legacy sources, key insights into customers are lost. True innovation comes with the ability to analyse new and old data sources simultaneously. By doing so, banks can complete the picture of their customers and comprehensively anticipate and predict their needs based on their customer profile.

Organisations in the financial sector need to use data and analytics to offer their customers the most relevant products and services proactively.

Given the complexity and variety of traditional and newer sources of data, financial service providers need to ensure they have the tools in place to support them on their data journey. Gaining full visibility on every piece of data flowing through their network, from a single toolset, regardless of where it resides or where it came from, is therefore critical. By implementing this level of visibility, data can be analysed, and the true value derived in real-time to the benefit of the customer. The ability to detect fraud is a perfect example of this. Suppose a bank can ingest and analyse data in the here and now. In that case, the business can identify patterns and trends that are indicative of fraud and alert the customer to this activity, before it becomes an issue.

Embracing a customer-centric approach

It’s clear that the way data is linked together, in a data lifecycle, is what enables organisations to derive intelligence through which exceptional customer experience is delivered. This is why focusing on developing a connected data lifecycle, which takes into account the holistic view of the entire data journey from edge to cloud, will become a cornerstone of success for banks who want to lead in their industry.

A connected data lifecycle will, however also help banks and other financial services organisations to can meet critical business goals, including:

Acquiring new customers

Segmentation allows businesses to analyse and profile their current customers. By leveraging techniques such as segmentation, companies can fine-tune their outreach and target prospective customers by taking insights and creating messaging that is tailored to target new customers.

Expanding existing business

With a complete picture of the customer, including every interaction they have with the organisation, banks can look for opportunities to offer new products and services proactively. When looking for opportunities to cross-sell, it is important that the salesperson has access to the customer’s entire profile, including previous searches and history, in order to offer the most relevant product. If the different data sets relating to the customer are sat in silos based on how they were ingested into the business, it can delay this process, and the customer may lose interest or look elsewhere.

With a complete picture of the customer, including every interaction they have with the organisation, banks can look for opportunities to offer new products and services proactively.

Driving customer loyalty and long-term retention

Using analytics-driven customer engagement tools, such as digital assistants, customer surveys and feedback analysis, financial institutions can gather this information, derive insights from it in real-time and then push the outcomes back to their customers. It is a quick and effective way to garner a deep understanding of customers’ needs and personalising offerings accordingly. In fact, continuous re-evaluation of the data could quite literally allow companies to give customers what they want, despite their ever-changing needs.

Putting data insights into practice

The focus on customer experience is a critical component to a financial services organisation retaining loyal customers and remaining competitive. Two premier businesses that have remained at the forefront of their industry because of their use of data are Rabobank and DBS.

In order to help its customers — including small businesses — become more self-sufficient and improve debt settlement, Rabobank needed access to a varied mix of high-quality, accurate and timely data, that they could feedback to customers on demand. To achieve this, Rabobank implemented technologies that can cope with heavy pressures on data processing and ingest large quantities of streaming data. This gave Rabobank the ability to rapidly process historic and real-time data together, helping its employees run faster queries. From customers’ loan repayment patterns to up-to-the-minute transaction records, Rabobank and its customers can now immediately access the valuable data needed to help them understand the status of their financial situation.

DBS, one of the leading banks in Asia, recognised that in order to deliver superior customer experience it had to become more data-driven. However, the company’s traditional technology stack for supporting advanced analytics was expensive to scale and not flexible enough to support this work. This led the bank to build a central data team and enterprise data hub that now enables staff to continually experiment and be at the forefront of innovation, to understand the customer experience more fully. DBS then used data and knowledge to apply human-centred design to its services. With the ability to more easily store and analyse billions of events in a modern data platform, DBS can answer questions before they’re asked, effectively engaging customers and proactively delivering a better service.

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Utilise data, remain competitive

Competition amongst financial institutions is fierce, and one negative experience is all it can take for a demanding, and changing, consumer to jump ship. To avoid this, financial services companies need to be guided by their data. The organisations that excel in the future will be the ones that are investing in the means to effectively ingest, analyse and derive value from data and put these insights into practice. After all, the data is there to be analysed and acted upon, so financial services organisations need to ensure they are getting the most out of it. If they don’t, they risk losing out to the more customer-centric competition.

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