Growing Excellent Banking Experiences

By Stephan Romeder, General Manager, Magic Software

Leveraging data to be Customer-Centric

Customer bank loyalty is on the decline.

Switching banks is easy, most consumers purchase only one financial service from their bank, and, according to a recent survey, every fifth European consumer is willing to use financial products from Google, Facebook and Amazon. In addition, there is increased competition due to PSD2, a new European Union directive, which opens up banks’ networks to third parties, known as open banking, so that consumers can transfer funds, compare products and manage their accounts outside of a traditional banking environment.

One way to earn customer loyalty is to proactively offer personalized services. But this requires highly reliable and accessible customer data, and the IT infrastructure of many banks is often inflexible, which gets in the way of having a single view of a customer.

Black Holes in the Customer Journey

More often than not, collecting customer data is more for the purpose of conforming to regulations, such as KYC, GDPR and PSD2, instead of leveraging data for strategic purposes, such as better customer retention and increasing the average revenue per customer.

Data such as age, gender, occupation, location, education and income is usually collected as part of onboarding new customers but it isn’t usually accessible by other departments. A retail bank can have separate customer databases for each department including mortgage lending, loan origination and servicing, credit cards and payments processing, and internet and mobile banking. In addition, many organizations are dealing with older legacy systems that are not able to communicate with each other.

In order to leverage the data for better customer relationships, banks need to revamp their structures and reorganize their systems around the customer instead of products. Systems need to be redesigned to seamlessly and securely deliver a single view of the customer to every customer facing employee.

Tracking Digital Footprints

Improved consumer engagement can increase the value that each customer brings, especially at the early stage of a first purchase. Some of these transactions are easy to track since they are already a by-product of digital banking as customers provide reams of data while using self-service tools on their laptops and phones. Each time consumers visit websites and use mobile apps they leave digital footprints that can be harvested to understand their behavior. Software can identify patterns, such as products of interest, score the level of interest, and link these interests and scores to the consumer profile record in the CRM system.

There is also important data in social media that can be gleaned and used to improve customer satisfaction. For example, customer inquiries or complaints regarding bank service fees or misleading statements are highly correlated with customer churn and should be flagged with suggested actions to prevent a customer from leaving.

It is also helpful to integrate with third party data services that can help fuel recommendation engines with information, such as profession, education, personal income, family size, household income, home value, disposable income, net worth, economic affluence, travel expenses and retail purchases. For example, high net worth individuals are frequently foodies that visit online food channels and shop at organic supermarkets. Advertising, marketing campaigns, product placement, relationship conversations and customer service calls could be tailored based on this information.

Geo, mobile and proximity marketing can be highly effective. A regional bank in the US Northeast knew that getting people into the branch can be difficult so they delivered offers when customers were already in the vicinity, removing a big obstacle.

Building long term customer value can be achieved by creating an integrated single view of the customer. Low-code integration platforms can accelerate the process while providing a unified method for collecting, sharing, and reporting data. By using middleware to connect all the customer information wherever it may be, and making the data accessible in a user friendly way, banks can invest in the customers that bring the most value. A centralized integration platform can become a vital information hub that enables banks to build lasting and loyal customer relationships.

By Stephan Romeder, General Manager, Magic Software

Leveraging data to be Customer-Centric

Customer bank loyalty is on the decline.

Switching banks is easy, most consumers purchase only one financial service from their bank, and, according to a recent survey, every fifth European consumer is willing to use financial products from Google, Facebook and Amazon. In addition, there is increased competition due to PSD2, a new European Union directive, which opens up banks’ networks to third parties, known as open banking, so that consumers can transfer funds, compare products and manage their accounts outside of a traditional banking environment.

One way to earn customer loyalty is to proactively offer personalized services. But this requires highly reliable and accessible customer data, and the IT infrastructure of many banks is often inflexible, which gets in the way of having a single view of a customer.

Black Holes in the Customer Journey

More often than not, collecting customer data is more for the purpose of conforming to regulations, such as KYC, GDPR and PSD2, instead of leveraging data for strategic purposes, such as better customer retention and increasing the average revenue per customer.

Data such as age, gender, occupation, location, education and income is usually collected as part of onboarding new customers but it isn’t usually accessible by other departments. A retail bank can have separate customer databases for each department including mortgage lending, loan origination and servicing, credit cards and payments processing, and internet and mobile banking. In addition, many organizations are dealing with older legacy systems that are not able to communicate with each other.

In order to leverage the data for better customer relationships, banks need to revamp their structures and reorganize their systems around the customer instead of products. Systems need to be redesigned to seamlessly and securely deliver a single view of the customer to every customer facing employee.

Tracking Digital Footprints

Improved consumer engagement can increase the value that each customer brings, especially at the early stage of a first purchase. Some of these transactions are easy to track since they are already a by-product of digital banking as customers provide reams of data while using self-service tools on their laptops and phones. Each time consumers visit websites and use mobile apps they leave digital footprints that can be harvested to understand their behavior. Software can identify patterns, such as products of interest, score the level of interest, and link these interests and scores to the consumer profile record in the CRM system.

There is also important data in social media that can be gleaned and used to improve customer satisfaction. For example, customer inquiries or complaints regarding bank service fees or misleading statements are highly correlated with customer churn and should be flagged with suggested actions to prevent a customer from leaving.

It is also helpful to integrate with third party data services that can help fuel recommendation engines with information, such as profession, education, personal income, family size, household income, home value, disposable income, net worth, economic affluence, travel expenses and retail purchases. For example, high net worth individuals are frequently foodies that visit online food channels and shop at organic supermarkets. Advertising, marketing campaigns, product placement, relationship conversations and customer service calls could be tailored based on this information.

Geo, mobile and proximity marketing can be highly effective. A regional bank in the US Northeast knew that getting people into the branch can be difficult so they delivered offers when customers were already in the vicinity, removing a big obstacle.

Building long term customer value can be achieved by creating an integrated single view of the customer. Low-code integration platforms can accelerate the process while providing a unified method for collecting, sharing, and reporting data. By using middleware to connect all the customer information wherever it may be, and making the data accessible in a user friendly way, banks can invest in the customers that bring the most value. A centralized integration platform can become a vital information hub that enables banks to build lasting and loyal customer relationships.