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Banking

Head in the cloud: how retail banks can rise to the challenge of a data-driven world

iStock 1394062080 - Global Banking | Finance

Chris Thomson headshot - Global Banking | FinanceBy Chris Thomson, Account Director, Strategic Finance Accounts at Treasure Data

The retail banking sector is unrecognisable as of late. Since 2019, TSB and Barclays alone have closed over 500 branches as the pandemic ushered in an era of paperless digital banking. In 2021, open banking payments increased by 500% as more and more consumers embraced the digital world. In this time, it has become clear that the days of standing in queues in branches for hours and storing years worth of bank statements are gone. Instead, consumers want simple, seamless and tailored banking services.

Whilst the digital transition for retail banks may seem daunting, the opportunities are vast – and as the logistics and operations of retail banks have changed in line with evolving consumer demand, so have their roles as businesses. Once an irreplaceable cornerstone of the highstreet, nowadays banks are expanding to become a digital partner to each individual customer – a financial and lifestyle advisor in the palm of their hands.

But it is not the traditional retail banks who are driving this trend – it is the challengers; those who aren’t just customer data proficient but data native. In 2022, Monzo reached 6 million customers, whilst digital bank Starling topped the Which? retail banks ranking based on customer service – vastly out-scoring incumbents such as Barclays, Santander and Lloyds Bank.

Their competitive advantage? Challenger banks have harnessed the power of cloud-based data to give customers the service they expect from the outset, and now traditional banks are scrambling to catch up. Today, two thirds of banks aim to move 30% of their data and applications to the cloud in just three years, and it’s easy to see why.

The connected customer experience: a bank’s holy grail

By connecting larger sources of customer data such as the Internet of Things (IoT), digital banking is becoming increasingly lucrative. Coupled with modern data strategies, vast sources of data exemplified by the IoT have the ability to build a user profile from activities such as contactless spending, borrowing and saving – providing customers with a personalised experience at lower risk and lower cost for banks. Whatsmore, when it comes to storing data from similar sources, connected cloud-based data solutions have higher service level agreements than the internal security systems used by retail banks, making them cheaper in the short and long-term – it’s a win-win.

In some ways, the banks of today are in the most fortunate position they’ve ever been in – with access to vast swathes of current and historic data on the lives of their customers, banks are now able to go beyond simply putting faces to names and instead can glean an extensive range of individual insights. Thanks to banks being able to securely access connected data sources on spending, borrowing and saving habits, they can now tailor their offerings from savings accounts to mortgage loans by simply looking into a constantly growing treasure chest of insights. By using a variety of data sources such as those from the IoT as part of a comprehensive data strategy, banks can offer more efficient services with greater personalisation. In short – consumer banking stands on the precipice of the golden age of customer service.

But despite all of this, fears that retail banks are already falling behind remain. Last year, at Treasure Data we surveyed 1,536 C-suite decision makers and found that of those working in the UK financial services sector, 61% said that their organisations struggled to amalgamate available data to build a true picture of their customer and brand. Upgrading, upscaling and upskilling data management strategies is therefore now an urgent imperative for retail banks. In the age of connected experiences, it is not a question of “if” data-driven customer service strategies will trump the ways of the past, it is “when”.

Opening the door to a competitive edge

If retail banks are to accelerate towards a future of delivering upgraded customer service, then upscaling their data management strategies effectively is a must, and this means connecting all available data sources – including those from the Internet of Things – to build a 360 degree view of their customers.

But as their digital transformation journey expands the amount of information at their disposal, retail banks must act now to eliminate data silos and the organisational blindspots they create as a result – ensuring no data is laid to waste. Without a truly holistic picture of their customers, banks cannot hope to provide the service they expect and as such seriously run the risk of falling short.

And it’s not just organisational infrastructure that needs upgrading – leaders need to invest in upskilling their data teams to effectively identify, evaluate and interpret their data. All data is actionable, but too many businesses miss out because they don’t have the right tools or skills in place to derive valuable insights. By ensuring everyone has both the tech and the capabilities required to connect the dots, retail banks will be in a position to truly take a panoramic view of their customers.

In a market where demand is growing for tailored and personalised services and consumers are increasingly showing they have little tolerance for poor customer experience, banks that do not keep up with the digital revolution at play risk becoming relics of the past.

The tools to remain competitive are there, and connected data sources such as the IoT are the treasure chest in which lies the solution. Traditional banks struggling to keep up with the challengers have the key, the question is are they ready to unlock it?

Global Banking & Finance Review

 

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