Drive Business Growth by Unlocking Rich Customer Insights Using Big Data Within Financial Services

Customer InsightManaging loyal customers is critical to the success of any bank – be it Retail or Wholesale. What is equally, if not more, important is the analytics that enable banks to develop and execute a successful Customer strategy. It should come as no surprise to anyone that understanding Customer Profitability, i.e. the value the customer drives for the bank, is the first step taken to build a differentiated customer experience where the most profitable and loyal customers are rewarded with the best possible experience, sometimes at a significant cost to the bank, a luxury that the bank many not be able to afford for all customers.

Banks, especially Retail Banks, are very data-driven and pride themselves in their analytical capabilities as compared to many other verticals. And yet, a complete fully-loaded view of a Customer’s profitability is something that has proven elusive for many banks. The reasons vary from bank to bank. But generally it comes down to a few key issues:

  • Disparate and numerous source systems
  • Inconsistency of data across these multiple sources
  • Heavy reliance on analysts making insights untimely

This typically leads to business decisions remaining disconnected with insights. Some early warnings are easily missed out in the process and key insights and trends are unknown to the organization for a long time.

FSIs have been focused on achieving a 360-degree view of their customers from a CRM perspective for more than a decade. Typically this involved gaining visibility into the customer across various product lines. This understanding is essential, but it only goes part way, failing to deliver a comprehensive understanding of the customer in terms of:

  • Engagement across channels and lines of business
  • Profitability based on multiple dimensions, such as by product, industry, geography and other segmentations
  • Expense
  • Performance
  • Growth potential
  • Risk across many dimensions

To compound these issues, the Financial Sector is witnessing one of the most volatile periods in recent history. It’s not just the traditional issues around ensuring effective margins, cost efficiencies or managing regulatory costs. Increasingly, banks are forced to compete with non-traditional players who are challenging the traditional banking models and offering customers a brand new experience or a totally innovative product. Modern technologies have led to customer demands for an “Always On” product. Customers want the ability to bank “Anytime, Anywhere and on Any Device”. In such a context, timeliness will be critical for ensuring retention of especially the bank’s most profitable customers. Retention is more important than in the decades past. With costs of acquiring new customers ever increasing, margins constantly squeezed through cost of compliance and diminishing fee revenue, retention has taken center stage.

Thankfully, the same modern technologies have provided the banks with many tools to meet these needs and compete effectively in the marketplace. Banks are becoming more data dependant and analytics is moving close to points of interaction with the customer, enabling banks to deliver a highly personalized and differentiated experience. There are external data sources that are enabling banks to understand their customers much better than ever before. Big Data technologies are enabling banks analyze a lot more data, a lot faster than ever before. Banks now have information on customer sentiments about a certain product or a feature within a product or more broadly about the bank itself. They now have a chance to react to these sentiments and contain any potential fallout.

But with all the technology options out there, where do banks start to look for the solution best for them?

  • Industry-specific and comprehensive data model. The first requirement is a comprehensive data model that is designed to accommodate all data sources within the bank, including customer, risk, performance, channel, and marketing. This enables institutions to pre-define critical relationships within the data model, allowing for intelligent rollups 
  • Unified analytical approach. FSIs require a unified analytical approach that provides the flexibility for custom solutions for individual subject areas without compromising data consistency enabled through data conformity. 
  • Prebuilt and/or flexible integration. Integration issues continue to plague today’s FSIs and complicate customer insight objectives. As such, when considering customer insight solutions, FSIs should seek solutions with pre-built integrations, as well as a service-oriented architecture (SOA), that facilitate essential communication between  enterprise performance management (EPM), enterprise risk management (ERM), CRM, compliance/governance and customer analytics solutions.
  • Ready-to-use tools. FSIs seek to accelerate deployment and return as revenue is at risk. As such, pre-built and industry-specific reports and dashboards and analytic models that address critical strategic analytic needs across customers, performance, product and channels, not only jumpstart rollout, but also provide comprehensive and pre-tested templates built by domain experts. They are not left to go it alone. 
  • Ability to operationalize and automate. The customer insight challenge involves not only defining processes and metrics but also measuring them. As such, FSIs require solutions that enable them to operationalize customer insight processes – defining them so as to make them distinguishable and measurable – and automate them to ensure rapid delivery of information when and where it is needed.

With the vastly enhanced information available with the bank and with computing power that can tap into this information, bankers are well positioned to extract insights in a timely fashion. Marketers are well positioned to leverage these insights to better target their customers to offer products that are tailored to the individual customer needs. Mass customization is truly the order of the day. Relationship Banking must incorporate these new dimensions as now more than ever the Customer is truly King!

Join me as I discuss how to truly capitalize on customer relationships to drive more revenue, deliver outstanding service and grow profitability at this year’s Oracle OpenWorld in San Francisco.  My session is on Tuesday, September 24th at 10:30am.  Do share with me your thoughts and comments on the blog as well.

Kiran Jagannath is the Vice President of FS Analytics at Oracle.  He can be reached at kiran.jagannath AT oracle.com.

Comments:

Post a Comment:
  • HTML Syntax: NOT allowed