David Maitland, General Manager, EMEA at Couchbase explains how financial institutions are building bridges by learning the value of customer engagement ~
If there’s one truth that stands the test of time in modern business, it’s that there’s nothing more difficult than building bridges when they’ve been thoroughly, comprehensively burned. Nobody knows this better than banks and other financial institutions. Ever since the global financial crisis began in 2007, banks could not have been portrayed as being anymore villainous if their CEOs had spent their time twirling their moustaches while tying damsels in distress to a set of railway tracks. So as they continue along the long road of redemption, how can banks help to restore their tarnished reputations and engender trust amongst their customers?
Retail Industry Leads With Customer Engagement
Perhaps the unlikely answer to this question is that an increasing number of financial institutions are beginning to follow the example set by retailers. One of the by-products of the new digital revolution in ecommerce has clearly been that customers have become savvier, better informed and able to operate across multiple channels – often simultaneously.
Because of this, retailers quickly realised that they needed to radically change the way they operated. Suddenly, one-way communication with customers wasn’t an option, and they realised that instead they had to create an environment where customer loyalty was the key to engendering trust and engagement. It’s an approach that has proven successful for everyone from major supermarkets to online businesses, all of whom have discovered the power and importance of customer engagement.
Banking Sector Shifts Towards Two-Way Communication
The same evolution is now occurring within banks and financial institutions. Where once, banks might have dictated terms to customers, and kept channels of communication closed, they are increasingly waking up to the fact that if they are to rebuild trust, and repair their reputations they need to follow the example of retailers by creating a similar ecosystem of customer loyalty.
Data as the Foundation of Banking Innovation
The key to the success of this approach will be data, and the way financial institutions choose to embrace it. Crucially, banks have realised that by harnessing customer data they can not only use it to engage with customers, but that they can also use it to profile them, promote affiliated services and upsell. By following the example set by retailers, who have embraced customers and the data they produce, financial institutions have discovered that they can not only build loyalty, but actually become more profitable at the same time.
Of course, underpinning all of this is the need to ensure that the right technology is harnessed to ensure that the best results are available. This means that banks need to find solutions that can help them to process, analyse and interpret data in large volumes, but also in different shapes and sizes. For this reason, banks are turning to experts in data analysis to be able to perform this function, and asking them, in turn, to define the technological platforms that will allow them to succeed.
Role of Data Science in Financial Services
What this means is that, like retailers before them, financial institutions now have a new generation of data scientists at work to determine and define the technology banks will be using in the future. What many of these experts have found is that the best way to manage both large quantities of data and information that comes in all shapes and sizes, is to use a NoSQL database.
Choosing the Right Database for Customer Insight
The alternative to this would be to use a relational or SQL database. Where NoSQL databases are able to quickly process, store and retrieve large quantities of unstructured data, SQL databases can struggle with large volumes of information. Even though they are very effective at storing and processing structured information, NoSQL databases are more suited to deal with the rapidly growing input from social media and other media sources. Complex queries therefore can be handled much more quickly and flexibly – imperative in the fast-paced financial market. NoSQL solutions can help banks to gain information on customers that is updated to the split second, ensuring that customers can be targeted, engaged and reached with context-aware promotions, and messages that directly apply to their circumstances.
Clearly, there’s still a way to go if banks to build sustainable bridges with a world that has become cynical, and suspicious of their motives following the recent global financial crisis. What’s clear is that by choosing to follow the retail road, and opting in to a new world of customer engagement through data, banks and financial institutions will go a long way towards rebuilding their reputations, and increasing their profitability.
