How banks can take a data-rich approach to customer-centric relationships

By Julius Abensur, Industry Head Finance, Relay42

Businesses within the financial sector sit on huge amounts of data, and the value of this combined information is astronomical. According to a report by SAS and the Centre for Economics and Business Research, the big data industry could be worth £322 billion to the UK by 2020, and retail banking will be among the industries that sees the most economic benefit, with an estimated figure of £16 billion.

But the potential of this data does not lie solely in its financial value. Every piece of data offers a unique insight into an individual customer — be it personally identifiable data such as name and address, or more in-depth behavioural indicators —  and if harnessed in the right way, this data gives banks the power to deliver communications to their customers with an unprecedented level of personalisation – and more importantly, relevance. The ability to interact with customers on a highly personalised level can go a long way to helping banks achieve specific KPIs, whether that’s increasing lifetime share of wallet among existing customers or attracting new ones in a cost-effective manner.  

However, there are two common obstacles that are currently preventing many banks from achieving more lifetime customer value from their existing data.

Firstly, many banks either lack the necessary solution to unify all of this data in a way that it can be activated, Pockets of data might be sitting in silos throughout the company’s IT infrastructure, which makes it difficult for data to be combined into a complete and independent profile — an essential requirement for effective personalisation.

Secondly, an increased focus on compliance makes it very difficult for financial institutions to take the data-rich approach that is necessary to activate customer data. The likes of the General Data Protection Regulation (GDPR) is set to force businesses both inside and outside of the financial sector to be more transparent with how they use customer’s personally identifiable data.

These issues can cause conflict and hamper efforts to effectively utilize data to drive enhanced engagements with customers throughout their journeys, despite the best intentions of those in the financial sector. However, the key to successfully adopting this data-rich approach is to strike a careful balance between data utilization and regulatory compliance; a balance which allows businesses to incrementally create more meaningful and mutually beneficial relationships with their customers – something often referred to as ‘two-way monetization’. This requires the implementation of a technology-based solution that can unify their existing data and orchestrate actionable insights at scale — after all, it is far more cost effective to increase value and loyalty from the customers that you already have.

Thankfully, data management solutions are able to bring all of this data together in a logical way while maintaining the regulatory compliance which is paramount in the financial sector. These solutions can unify all the data held by a business and then activate it to orchestrate intelligent customer journeys vs. fragmented customer interactions— with all types of data across multiple data sources.

Integrating multiple data sources and managing large amounts of data is the core capability that enables businesses to deliver extremely relevant journeys to their customers. This data can provide banks with customer insights on an individual level, including information around specific products they’ve purchased, interactions, behaviours and experiences, which can help inform the unique information they receive. So while a certain individual might have indeed taken out a mortgage in the last three years, businesses can also see that they have recently renewed their home insurance and are looking to re-mortgage in the next few months, meaning they can replace the home insurance offer with a special mortgage deal.

Of course this is just a theoretical example of how data management solutions can help those in the financial sector achieve effective personalisation while remaining within the boundaries of compliance, but the power, versatility and scale should not be underestimated. They can be integrated non-intrusively into any business IT infrastructure and used to deliver all kinds of messages to customers — the only limit is the creativity and imagination of the organisation itself.

Conclusion

With banks sitting on so much useful data, it would simply be a shame not to harness it through a data-rich approach to enhancing customer engagement. Banks can use the data they’ve held for so long to deliver highly relevant journeys to customers on an individual level, which in turn drives further customer engagement, lifetime loyalty and satisfaction.

Julius Abensur, Industry Head Finance, Relay42

With a successful international track record of working closely with Financial Service Providers, Julius is responsible for expanding and working closely with Relay42’s clients and partners to turn their strategic intent into reality. His focus lies on transforming business challenges into practical solutions that deliver customer outcomes enabled by smart data management technology.