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Banks and Customer Data: Closing the Personalization Gap

By Tyson Nargassans

November 2 — It’s no secret that banks need to better personalize their customer experiences. And it’s clear that those experiences need to be more timely and relevant – creating and nurturing relationships on customers’ terms, not the bank’s.  But in most cases, the reality doesn’t match up with this vision. What’s holding financial institutions back?

Banks have a lot of data, very good data, in multiple places. Now, it is critical that they shift more focus onto creating the ability to act on that data. That’s the only way they can close their personalization gap with existing customers.

One and Done

Here is an all-too-familiar scenario:

Bank A comes up with a plan to look at a group of individuals who are doing business with a competitive institution.  They start by gathering data, which offers them breadcrumbs of opportunity. For example, ACH and Bill Pays show opportunities where their customer has a relationship with Bank B. The good news is that Bank A probably has the primary relationship if the customer is paying from their account. The bad news is that they don’t have that line of business. Someone else is in the door.

Bank A then acts on this intelligence, but in wading through committees, IT and marketing, the process becomes heavy. And despite what success they gain, it isn’t scalable or repeatable.

 

Dropping the Ball

Once that effort is done and performance measured, the bank just moves on to the next problem. They’ve never set up the structure to make this a recurring process, so the day-to-day lifting becomes too heavy for them to keep up. They try to solve this problem by making it easier to get the data. That’s a key juncture: their focus isn’t so much on coming up with a better solution as it is on the difficulty of obtaining the data they need to succeed.

Maybe it was so hard because data was maintained in the core system and they couldn’t pull it out. Maybe it’s in a home grown system or even worse, in Excel. And on it goes. The focus shifts to all these different, often elusive, silos of information instead of on the actual challenge of reaching the right customer with the right offer.

The clues sitting in the data – the information that lets the bank create and deliver relevant, meaningful, relationship-building content – get ignored.  Without it, the bank risks becoming a commodity experience easily replaced. Would Amazon or Facebook or Google ever let a shred of valuable data just sit? No.

Too often, the bank’s goal drops from being smart about a customer’s pestering needs, how to know where they are going, how to be genuinely relevant, to becoming more about form and factor. Maybe they ignore it completely, or they blast information to the masses without any relevance. They stay focused on products rather than customer needs.

They’re spending all this time gathering data, consolidating data, worrying about data lakes and data warehouses and visualization tools and ways to segment it, but they’re never addressing the crux of the problem: how to change that customer’s behavior.

Meanwhile, they are facing a whole slew of new entrants to the market that are competing for their customers and that follow the digital playbook to win. They meet the customer need. They understand today’s consumers expect a set of knowledge and guidance built into every experience.  Leveraging customer data into valued experiences and relationships is how they roll.

Acting on Data to Close the Personalization Gap

Important as it is to understand the data, the real key is acting on it, every day.

For banks to be smart about their customers they must be ingrained in the flow of data – not just gather it – and be able to interpret that data at the speed and scale of today’s world. They have to be able see it, read it, hear it and react to it – and fast. Right now, much of the industry is not structured for banks to leverage all the tools around it to do that. The culprit, in many cases, is their focus on the next customer and the next new account more than their current customer base.

It’s not that banks are strangers to the concepts of loyalty and retention. It’s that the pressure to acquire new customers supersedes their commitment to successfully keep and build increasingly profitable, existing customer relationships. The balance is tipped too far. Why?  Often, it’s because of a lack of understanding – and a lack of faith in –their customer data.  They don’t believe they know enough about them to save those who are drifting, let alone significantly boost that relationship’s value.

More than once, bank and credit union marketers have told me that they focus on branding and customer acquisition because it doesn’t really require any intelligence on their customers.  In today’s high-speed, high-relevance customer world, that’s a recipe for disaster – one that will only be averted by a fundamentally different approach to understanding and acting on their customer data.  Meanwhile, data-smart competitors crowd the financial services marketplace to win and keep customers that demand increasingly relevant and personalized experiences.

 

Tyson Nargassans is CEO and founder of Saylent, providing financial institutions with data analytics software and services that improve profitability and product innovation by delivering smarter, deeper, actionable insights on the financial behaviors of consumers and businesses.

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