Blog By: Arjun Ray Chaudhuri
Information is the lifeblood of any business, and the financial services sector is awash with useful information – both valuable customer details and also a wealth of ‘big data’, some of which will be useful and some of which won’t.
So, are banks making the optimum use of the information that’s available to them? That was one of the key questions that Oracle has been addressing in a new report, published jointly with Paris-based Efma. Efma, for those of you who don’t know this not-for profit association, brings together senior executives from financial institutions across Europe and beyond. The report, entitled “Responding to change – how are banks using information and pricing strategies to boost profitability?” is based on the results of a survey conducted by Efma, along with two Think Tank sessions organized by the association and led by Oracle. Senior executives from financial institutions worldwide were questioned during the study.
Collecting the information
The use of big data and pricing strategies will be covered by future blogs. But what can our survey and the Think Tanks tell us about the use of basic customer information? The report starts by looking at how banks gather and use information so that they can have a 360-degree view of their customers. This is vital for increasing customer engagement and retention and for optimizing profitability.
It was immediately clear that although the vast majority of banks use details of their customers’ information from their financial transactions, relatively few make use of the wide array of information available on social media, either directly or indirectly. However, this can give valuable insights into customer attitudes and behavior. This was confirmed by in-depth interviews with five leading banks in different geographical regions. Some of the banks are using financial and other details obtained from their customers’ accounts. Although banks generally seem to agree that a 360-degree customer view is desirable, many are hampered by legacy systems, where information is stored in many different places and in different formats. This reflects the pressing need for a central source of information in many banks throughout the world.
Analyzing and using the information
In terms of analyzing the customer information that already exists within their banks, financial institutions are again missing some golden opportunities. Over half of the organizations questioned in our survey don’t use real-time analytics and only a small number use these on a daily basis. The in-depth interviews showed a varying picture across the different regions. For instance, a Russian bank has a team of analysts and employs various analytical approaches, although it’s not yet really employing real-time analytics. Two banks from East Asia and the Middle East said that they currently lack the capabilities needed for real-time analytics. Meanwhile, a financial institution in the Czech Republic is using machine-learning algorithms – and a Central and Eastern European bank is exploring the use of different types of data in real-time analytics. This bank is also using customer segmentation to help it to generate different campaigns for different types of customers.
Once banks have collected and analyzed customer data, the results are invariably used for refining customer-focused marketing campaigns. However, few are taking this to the next level by using the results from the data to increase customer engagement throughout the campaign.
An emphasis on customer engagement
In a changing world, where banks face increasing competition from fintechs and new entrants from outside the financial services sector, they need to start making much better use of the wealth of customer information that they’ve accrued. This will involve gaining a greater insight into individual customers; identifying those that are most valuable; and finding ways of enhancing their service levels and increasing customer engagement.
Some progress is already being made in this area. However, for a few banks, the customer experience is still a relatively new concept. A bank in East Asia is now starting to grapple with this and wants to develop more seamless processes. In Central and Eastern Europe, a bank is exploring the use of customer behavior patterns for targeting its campaigns more accurately. And in the Middle East, a financial institution has recently completed a comprehensive customer-centricity training program.
As a result of these changing demands, financial institutions need to explore the customer relationship and look at their needs, their pressure points and their relative profitability. This new emphasis on customer engagement will be a challenge for most banks, but it’s one that they must face and must overcome if they want to survive in the difficult times that lie ahead.
To read the full report on Responding to change, please visit
Arjun Ray Chaudhuri is a Senior Principal Product Manager for Oracle Financial Services. He can be reached at arjun.ray.chaudhuri AT oracle.com.