By Ritu Jain, Director, Industry Marketing, Alteryx
Banker-bashing is as popular today (and dare we say it – fashionable) as it ever has been. It remains to be seen whether the reforms implemented by government, regulators and the Bank of England will mend the reputation of banks with the general public. Whatever the impact of these new rules, they are designed only to prevent another cataclysm – not to repair the relationship between banks and their customers.
Is it possible to turn banks from the bêtes noires du jour into loved and valued members of society? Perhaps not – but it is not the industry’s aim to be popular. More important to it, by far, is to try and get banks as trusted as they once were when the local bank manager was the pillar of society. And the best way for banks to become trusted is not through being liked, but by being reliable and instilling customer confidence.
Lessons from the retailers
The explosive growth of omnichannel trade in recent years, has taught the retail industry the value of treating customers as individuals. Retailers are increasingly recognizing the impact of personalized communications and promotions on customer engagement and loyalty. Banks are not insulated from the trend. Like retail shoppers, banking customers too have high expectations from their financial services providers. They demand a tailored yet consistent experience from their bank as they move from channel to channel and product to product.
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The retail industry has illustrated just how vital a role personalized service and offers play in creating a sense of care among customers– along with the confidence that they are being listened to. To replicate this, banks must recognise the changing habits and preferences of banking population and adjust product and service mix to meet their needs. For example, they must respond to increasing demand for convenience by adjusting or updating distribution channels and offering mobile banking, and be relevant to aging demographics by offering retirement and investment products. This requires more than just a change in attitude, but a revolution in the way that banks use their data to inform decision making. Used effectively, data can help pinpoint market trends, predict demand, and assess risk, so you can adapt product and service portfolio to changing customer needs for improved loyalty, higher retention rates and enhanced profitability. One large financial services institution is leading the way by blending five billion rows of customer and transaction data across multiple product lines to identify and retain at-risk customers, improve contact centre agent behaviour and optimise its distribution network. The result: reduced costs, improved convenience and overall customer experience.
To protect AND serve
Banks are extremely protective about the data they hold, to the point that usage of data is limited to the line of business for which the data is collected, with very little sharing a across departments. Whilst the caution is understandable given they are dealing with high volumes of extremely sensitive financial information, it means no one has a complete picture of all customer interactions. Further, with IT controlling access to data, line of business users often don’t have relevant information in time to offer better, more personalised services and promotions. Banks must realise that data is not there just to protect, but also to serve.
Beyond data protectiveness, an even bigger obstacle that is holding banks back from maximising the value of their information, is the complexity of their legacy IT infrastructure. Built over the years, the traditional banking IT infrastructure comprises of a series of incompatible systems siloed by line of business or product line, making it extremely difficult and time-consuming to extract data and insight. Employing armies of IT staff and specialized programmers, banks have been able to gain insights for a few select initiatives but that has come at high operating cost[i] and not allowed them to achieve pervasive data-driven decision making goals.
Discovering the value of your data
While breaking down the siloes and connecting data within may seem like a big obstacle, there are analytical tools that banks can empower their line of business analysts with. Tools, they can then leverage to access, blend and analyze data from multiple systems and sources and uncover hidden insights without any coding, or relying on IT and specialized programmers.
It is only with access to the available data and putting analytical power in the hands of the line of business users that banks can start providing more tailored, engaging experiences, based on a multi-dimensional view of each current customer and future prospect. Better yet, the benefits will not begin and end with just the customer. Access to sophisticated, yet user-friendly self-service data analytics capabilities will also deliver untold benefits for risk management and compliance, enabling banks to assess and optimise risk exposure across business units, and fulfil their obligations for transparency and accountability in regulatory reporting. A good example is a large multi-national financial services institution that is using Alteryx to forecast near term demand for derivatives to comply with the Volker Rule – which puts restrictions on banks from making certain types of speculative investments that contributed to the 2008 global financial crisis. Using Alteryx the bank succeeded in analyzing data and adjusting investment positions in a fraction of the time it would have taken otherwise.
Banks can spend millions of pounds on marketing campaigns to try to paint themselves as friendly and approachable, but if they want to win over a sceptical public they need to demonstrate why they can be trusted – and fast. They already have one part of the puzzle – the vast volumes of data. All they need are right analytical tools that empower their line of business analysts to themselves effectively master the data and put it to use, to change the way they are seen by customers and regulators alike.