In today’s world, data is wealth. Most firms store massive amounts of data so that it can be put to good use in the future. The future is now! Many banks and Financial Institutions (FIs) are trying to engage their customers better so that it can lead to a more personalized approach and enable customer retention. So far, these institutions had been using push strategy in marketing where materials are pushed to customers on a very generic basis without any study in relevance. This strategy is more or less like taking a chance. Some customers will find it relevant and some might not. Ultimately, the ones finding it not to be of their interest will unsubscribe to the mails or might permanently add the mailers to spam. To avoid this, FIs have started using data to analyse and derive meaningful inferences and then devise marketing strategies to personalize the experiences for their customers.
This is where Analytics comes into play. Companies are forced to anticipate customer needs in order to provide them with better services that are in sync with their financial goals. Is it possible to determine the patterns on a wide customer base? According to studies, most financial organizations have massive store houses of data, but a very small portion knows what data is important, or how to leverage this data for increased revenues and lower costs. FIs should necessarily figure out unique strategies to engage customers in interactions based on their needs, life stages, aspirations and account spending. Analytics provides the golden opportunity to look into the future. Here is how the process works!
To do an analysis, FIs and banks need to ask the following questions.
• What type of data is needed?
• Based on the collected data, what type of analytics should be used?
• What type of marketing model is best suited to determine a product or service for a customer?
Once these questions are answered, the company will be able to determine a more personalized approach designed exclusively for different sets of customers.
According to Aite Groups, these are some of the most important areas in which analytics can make a difference to customer acquisition and retention.
1. Channel preferences: By identifying the banking channels used by the customers, FIs can connect with them through these channels based on the majority.
2. Social Media: Studies also show that two thirds of customers use social media. This can be a great insight to study customer behaviour and life events.
3. Mobile data: Understanding how often an app is used or the amount of time spent on an app will give insights to add/remove features based on user analytics.
4. Customer ratings and reviews: This is the best way to know and understand what apps and services a customer likes or dislikes.
5. Bill payments: Understanding regular or periodic payments of a customer can be a valuable insight for the FIs in order to devise ways to engage them through push notifications and reminders.
6. Personalized Financial management: This is the most important part of predictive analytics. FIs should know the financial goals of its customers. This will help them hand-hold their customers to reach these goals by recommending products and services that are in line with these goals.
7. Geo Location: Location based services have gained much importance after the disruption of digital banking and the advent of smart phones. This could be a great value addition since information on nearest ATMs, customer care centres and other services will come in handy when customers are in unfamiliar locations.
8. Weather and other services: If majority of customers choose digital channels for their banking, weather forecasting does very little. However, it is still a value addition.
Here are a few testimonies from top banks in the US.
Bill Hoffman, Chief Analytics Officer, US Bank, Minneapolis – “I had a front row seat to both the amazing power of good decisions and the destructive power of bad ones. I developed a visceral dislike for bad decisions, which has powered my professional passion: to enable good decision-making. At the end of the day that’s really the fundamental mission for anyone in a data analytics role. Keep the customer at the centre in whatever you do. Focus on creating value at the intersections. Quite often an organization’s data analytics “power plants” are up, but the lines are down. The biggest sources of value from data analytics will come from the power lines that connect a holistic understanding of – and insights on – your customers’ relationships with you across business lines, across products and services and across all channels.
Rajendra Patil, Head of Data Strategy & Decision Science, Bank of New York Melon, NY
“You can’t improve anything unless you are able to measure it and analyse it. Culture change is about improvement. You have to start with user needs and wants and make sure that the things we work on and the questions we ask are relevant to addressing them, directly or indirectly.”
Customers are always on the lookout for personalized services that are relevant to them. Data Analytics will be a sure enhancement to help industries get a demographic concentration of the total population based on their interest, life style and financial goals so that their products and services can be specific to their needs and preferences. The next big thing is data analytics which is yet to be tapped to its fullest potential. In the years to come, we will be able to see the intrusion of predictive tools, big data and analytics apart from AI and Machine Learning.
About Market Simplified: Market Simplified is a thought leader in revolutionizing and digitizing products for financial institutions by continuously innovating and simplifying finance. We take pride in giving the best User Experience with highly personalized and enhanced transaction experience for end customers with our ‘Experience Engineering’ platform that is driven by Analytics, AI and Machine Learning technologies. Additionally, the solutions are also powered using Blockchain technology. Our clientele includes industry leaders like OptionsXpress (Charles Schwab), Currenex (State Street), MB Trading, Maybank Kim Eng, Kotak Mahindra Bank, National Stock Exchange of India and many others across the globe.
About the author: Venkat Rangan is the Founder and CEO of Market Simplified Inc. He is a technology enthusiast. Venkat also has great interest in aviation and loves to read and learn about airplanes. Whenever he gets time, he likes to fly the Cessna Sky Hawk 172. His dream is to fly the Gulf Stream G650. Sometimes it makes us wonder – why he isn’t a pilot or running an airline business…