A few years back, the Economist published a report titled “The world’s most valuable resource is no longer oil, but data.” Following this, many industry experts and publications hailed “data” and “data-driven decision making” as the next big thing in business. In a world of never-ending technologies with disruptive developments, data is playing a greater role in helping organizations to get a better understanding of their customer behaviors and improve the way they operate. Well, it seems that even the banking industry is no exception.

In recent years, when it comes to operations and services delivery; data has quickly become the communication tool of the future and many banks see the value in transforming their systems and processes around this potential. Data gives financial service providers insight into customer preferences and allows them to customize their offering while increasing efficiencies which ultimately leads to increased margins.

There’s a natural progression in the use of data in banking

Banks have come a long way! Today’s customers have multiple accounts with widely varying features—and better access to data via the internet, apps and mobile devices. What’s even better is that operational departments are now using automated data collection and analysis to effectively provide banking services. That said, as companies shift to data-driven solutions, traditional banks are expected to face more competition. These competitors are also likely to push traditional banks to offer more personal or digital banking services in order to compete and stay relevant.

In a digital world, customers expect banks to connect the dots and deliver seamless, personalised experiences. In order to adjust accordingly, banks need to be able to identify what the customer wants as well as use data to deliver tailor-made experiences. Data becomes a crucial link between meeting those expectations and satisfying the customer. For example, the rise of digital payments has changed how customers bank—a transition further catalysed by COVID-19. It doesn’t just help to boost online and offline sales, but the increasing amount of digital transactions has resulted in generating an astronomical amount of customer data every day. Banks now have a chance to utilize this data for an excellent customer experience. They can further employ technologies like artificial intelligence and machine learning to improve processes and deliver good product experiences to customers.

In order to achieve ‘customer nirvana’ of perfecting service for each customer, it is essential that the bank uses data to gain insight into their behavior. This information will paint a complete picture of who the customer is and what they wish for so that the bank can refine their business models accordingly to develop an experience for their customers specifically. To learn more about how this is done, read on—

Gain a complete view of customers with segmentation

Customer segmentation is a common practice in the financial service industry. However, it lacks the granularity required to understand its customers’ wants and needs. The bank can leverage data to improve it by building detailed customer profiles using insights into customer demographics, behavioral patterns, the number of accounts in use, products currently used, offers declined in the past, sought-after products and financial health. This will enable banks to make customised offers for optimal profits. Banks can use these profiles to engage with their customers, identify the right markets and offer products that are relevant and appealing. As a result, banks can increase both the quantity and quality of customer interactions.

Create simple, seamless multi-channel experiences

Customers today interact with banks on multiple channels, whether for account information or transactions. Analytic insights from mobile and web application usage can be used to determine if customers are facing problems in their interactions on any channel. From identifying drop-offs during payments to ensuring seamless interaction across multiple devices—banks can leverage data to fine-tune processes and create smooth digital customer experiences, which will help improve customer satisfaction and consequently impact retention rates positively.

Monitor frauds and mitigate risks

While the number of online payments is rising, the number of frauds seems to be rising in sync. Banks should focus on providing additional security when it comes to transactions in order to protect sensitive customer data. Advanced payment security features like second-factor authentication and risk-based authentication are examples of how data can be used together with other methods to identify unusual purchases and flag them for review before completing transactions. Secure payment solutions help banks reduce the risk of fraud and ensure the safety of customer data. Therefore, building trust and nurturing meaningful relationships with customers.

Delivering superior customer experience with data

Multiple financial institutions in the market offer types of customer-centric products that suit various needs, such as hassle-free loans with no long wait times, easy online payment options and more. The customer is spoiled with so many options to choose from. That leads us to think—good customer experience is critical when it comes to determining where one gets their business. Financial institutions need to leverage data and disruptive technologies in order to understand customers more intimately and proactively meet their needs in real-time. Targeting customers more accurately based on their specific wants or needs, communicating with them efficiently via venues that are most convenient for them will help to eliminate any redundancies they may have had to deal with before. If customer-centricity is at the core of a bank, then it’s important to have data as the backbone. Banks leveraging insights from user data to deliver tailored experiences are better geared to serving their customers. This means they are set to grow rapidly in the long run and be their customer’s first choice today and tomorrow.

Padmanabhan R

Career Banker, Galleried Photographer and Travel Columnist. Also develop banking applications in free time. Finished my CA and have done my tour of duty with organizations like Times Group, ICICI Bank and Yes Bank, before landing up in Clayfin to create digital banking channel solutions.

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