After the recession hit, banks saw a decrease in customer trust and loyalty that is still impacting day-to-day operations. With this consumer perspective in mind, banks need to put forth efforts to rebuild customer trust across their operations. Yet, one of the biggest obstacles they face is that most institutions are still using archaic data storage infrastructures to manage customer information, which often translates to customer frustration and broken relationships.
These systems store data in out-dated, siloed channels that do not update information in real-time or allow for integration with other channels. Bank representatives often cannot access a customer’s entire portfolio immediately, forcing them to redirect customers to multiple channels to solve a single issue. Siloed structures also tend to produce tremendous inconsistencies across data sets, making it difficult for banks to gather the correct customer information from one channel to another.
Along with managing archaic data systems, banks are challenged with meeting ever-increasing customer demands. Many customers today have a number of bank accounts open — checking, savings, credit cards — and expect that all of their information should be readily available for real-time access of their finances. In addition, they also demand personalized customer service with every bank interaction, whether it is over the phone or in-person at a bank branch.
In addition to improving customer retention, banks are in need of ways to improve fraud prevention and mitigation. With recent increases in reported violations, banks require the technological capabilities to identify potentially fraudulent accounts before they become customers and consistently monitor customer transactions for suspicious behavior or signs of identity theft.
One way to combat these challenges is by compiling data into a single, cohesive view of a customers’ profile, using comprehensive data management software. When used correctly, this technology can not only help banks easily transfer customer data from an older siloed structure, but also allows them to monitor data with real-time reporting and deliver high-quality information to customers.
Making it Work with Data Management
The process of using data management software helps gather all information about each customer from multiple channels and correlate it within a customer information file. Today’s data management technologies allow banks to virtually transfer data in real time instead of physically moving large data files and keeping it in an off-site storage center. The software can also be integrated with a bank’s older legacy systems, for a cost-effective way to upgrade without completely replace an existing infrastructure.
Once customer data is collected in a centralized location, it can be reviewed and made consistent, so that all information about each customer is placed in the proper CIF. Because data about a single customer or a household may be represented differently from one siloed system to another, it is crucial for banks to understand exactly how the data is represented in each system. For example, one account may have ‘John Smith’ who lives at ‘123 Main Street,’ and another may say ‘John J. Smith & Mary Smith’ who live at ‘123 Main St.’ A bank needs to recognize the discrepancy in each data set and that both versions of John Smith are the same person. Understanding the data lets banks create proper business rules that are applied during the virtualized sorting process. With sophisticated data management software, banks can flag a discrepancy earlier in order to avoid the delays and setbacks of finding a discrepancy late in a project. Customized business rules then become vital during the next step of combining the data for cleansing.
Cleansing data uses the business rules that were created to compile a single view of an individual customer or a household. Data management software provides customizable collaboration features to help bank administrators take control of the cleansing process when working with their IT departments. With the ability for multiple people to access a set of data simultaneously, IT can seamlessly use the business rules while bank administrators monitor for any issues that need immediate attention. After data is properly cleansed, the result is a centralized data repository of customer information across all channels, including a single, 360-degree view of each customer’s profile.
360 Degrees of Relationship Benefits
Having a complete CIF, including what services customers currently use and all the transactions within each channel, allows banks to improve customer trust and retention. Banks can proactively analyze the data and determine what additional services each customer would benefit from and turn it into actionable cross- and up-selling opportunities. In addition, a complete CIF can improve the efficiency of all interactions by directly handling a customer’s concern in less time and with increased accuracy.
With on-demand access to customer account information, banks can more easily monitor for fraudulent activity and detect any suspicious customers unauthorized to open accounts. This, in turn, lessens the number of fraud incidents and decreases the amount banks pay when handling violations.
Better data management is a further differentiating factor in a highly competitive market, giving banks that choose to implement it the power to provide valuable insight to customers and build quality, long-lasting relationships.
Navin Sharma is director of global product strategy for data quality at Pitney Bowes Business Insight. For more information visit www.pbinsight.com.
Deeper Data Mining
Once an integrated data management system is in place, banks can take data mining one step further with customer tracking.
Financial institutions (FIs) are well-positioned to access personal financial management data to provide their customers with personalized financial services and offers, according to the Javelin Strategy & Research report “Data Mining and Predictive Analytics for the Financial Sector: Banks Hold Trust Advantage When Tracking Consumers in a Privacy Minefield.” By doing so, institutions can establish an advantage in data mining and reap the benefits of closer customer relationships and new revenue opportunities, according to Javelin.
“FIs that combine transaction, search and location data create a marketer’s dream: consumers who are nearby and ready to buy,” said Javelin’s Mark Schwanhausser. “As FIs process checks and conduct debit and credit transactions, they have the advantage of immediate access to transaction data. However, FIs need to move quickly to partner with search and location data providers and fend off players that are extending their reach into payments.”
Almost four in 10 consumers say they are comfortable or very comfortable with letting their banks track or analyze their transactions in order to provide better service. While banks have a clear trust advantage, Silicon Valley firms, such as Google and Facebook, often grasp new online markets with greater skills, making for a fascinating battle for consumer loyalty.
“Our research shows that FIs hold a 3-to-1 trust advantage over third-party affiliates and merchants,” said Javelin’s James Van Dyke. “They must also focus on sustaining and building trust. To address privacy concerns, FIs must be transparent about how they will use financial data and demonstrate how it will benefit the consumer.”
Copyright © September 2011 BankNews Media