Richard Hallt, principal consultant at Holley Holland discusses why in order to survive, banks need to step away from handling fragmented customer data and gain a holistic view in order to create the best customer information and offer clients what they want, when they need it
One of the major issues the banking industry is tackling is the use of legacy IT systems. Not only do banks spend 70 – 90 per cent of their IT budget on managing legacy infrastructure [ IT trade body intellect ] but many are receiving fragmented customer data as it is held in disparate systems. This is not an effective way of working, especially given the highly competitive market and the benefits which can be achieved by gaining a holistic view and turning customer data into truly useful management information to support strategic growth.
It is well known that banks have the most complex IT systems around. Many have been pieced together over the years and contain ageing mainframes, overlapping systems owing to mergers and acquisitions and various customer-facing systems that have been bolted on top of other platforms to deliver online and mobile banking. Of course, these systems with the right support work day in day out. However, it doesn’t mean that they are working as effectively as possible.
In order to offer customers what they want, when they want it, banks need to ensure they have a complete view of the customer and that they are consolidating data to create the most functional information. Working with disjointed IT systems, customer data is not only fragmented but it may be duplicated, particularly if banks have merged and there is no clear view of client records. Banks need to ensure customer details and records are linked together and are consistent and complete.
The big picture
To make the most of customer data, banks need to have an idea of where they are going, in terms of a mid to long-term strategic plan. Otherwise in five to ten years’ time the infrastructure will be as fragmented as ever – banks need to choose the best fit solution either from their existing incumbent systems or go to market for a solution with strategic longevity. However, before this decision is made, banks should take a step back to find out what IT systems they have in place – what is there to work with? It is only then, that it becomes possible to set a flexible yet long-term strategic plan that will streamline operations and ensure customer data is being used effectively.
HMV and many other retailers didn’t look to the future and as a result, an increasing number are heading into administration or are already there. Retail banks need to heed the warning from the high street and be prepared to look at the bigger picture.
Be data wise
A young company can often get to market quicker than an established company that has been around for many years because they come without the baggage of legacy infrastructure. Consequently, established banks need to ensure that they are making the most out of the business opportunities they have to hand, not only to remain profitable but to keep the customer happy. By treating customers as customers, rather than just an account, banks can service their needs sufficiently, which is critical given that banks often rely on existing clients to boost sales.
To do this, banks need a cross-channel, cross product view of the customer and the capability to translate the data they have into tangible and useful information. There is a wide range of customer data out there from pensions to saving accounts, insurance to mortgages. To tap into this resource, banks need to integrate all existing data and then use this to build up a personalised picture of each customer.
When looking at the softer side of a customer, with a full view of a client’s accounts and spending habits, it becomes possible to ensure that they are offered the most relevant upsell and cross sell opportunities. It is no good offering a student an ISA if they clearly have little interest in long-term saving or indeed, offering one to someone that already has one. Banks need to be offering complementary services and avoid irritating or even losing a customer due to duplicated sales pitches.
The key is to target the customer and get the right marketing literature out that is relevant for them at that point in time. The data can also be used to make strategic decisions and help banks to decide what to market in the future.
Get the complete picture
In order to remain competitive, banks need to gain an all-inclusive view of customer data – this can only be achieved by taking a closer look at the legacy systems in place and ways in which these can be improved to achieve data consolidation. And of course, it’s great to have the data to hand but it is how the data is used, which will make a difference.
Banks need the capability to turn data into useful information – that’s the key to planned growth. With a flexible long-term strategic plan, a full understanding of what a customer wants and a clear view of the banks direction, it becomes possible to service the customer better and survive and thrive in a highly competitive environment.