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Unlock the Value of Your Financial Institution’s Data

Posted May 27, 2019 - Mike Triggiano

Community financial institutions are drowning in customer data. Every debit card swipe, every ACH, each time a consumer uses online bill pay produces a piece of data that gives insight not only into that customer’s relationship with the institution, but his lifestyle and even potential needs. The amount of data that businesses can garner from their customers has grown exponentially in recent years—driven largely by the digitization of critical services and touch points—and is mind-boggling. By next year alone, about 1.7 megabytes a second of new information will be created for every human being on the planet,2 a 700% increase from 2017.3 This number is only expected to increase, as financial institutions and other businesses embrace the digital revolution. In fact, by 2021, half of adults worldwide will use a smartphone, tablet, PC or smartwatch to access financial services.

The proliferation of customer data and the ability to use it to open up new service and revenue opportunities has become a priority for many financial institutions, and rightly so. Tom Davenport, a Fellow of the MIT Initiative on the Digital Economy and professor at Babson College, wrote in a recent issue of Harvard Business Review that companies must “fundamentally rethink how the analysis of data can create value for themselves and their customers.” The potential for using data to identify untapped opportunities is enormous.

Amazon is often cited as the exemplar for capitalizing on data to increase sales and improve the consumer experience. The company tracks each customer interaction—from site searches and purchases to Alexa commands, to song or movie downloads—to develop a 360-degree view of that consumer’s preferences, buying habits, etc. When a consumer purchases prenatal vitamins from Amazon, for instance, she will soon see pop-up ads for other pregnancy and baby-related items, as well as offers and reminders to repurchase the vitamins at the exact time they need to be replenished.

This highly personalized experience is a primary contributing factor to Amazon’s success and one financial institutions should seek to emulate. Why? Because organizations that leverage customer behavioral insights outperform peers by 85 percent in sales growth and more than 25 percent in gross margin.4 Additionally, according to McKinsey & Company, personalization based on customer data can deliver 5 to 8 times the return on investment on marketing expenditure, and can lift sales by 10 percent or more.

Putting Data into Action

Banks and credit unions today partner with a myriad of vendors to provide the many different services consumers have come to enjoy, including debit and credit card processors, online banking and bill pay vendors, social media platforms, etc. The result is a multitude of disparate systems that may appear to the consumer to work together reasonably well, but do not really communicate with each other “behind the scenes.”

In order for the data these systems produce to have any impact on the institution, it is imperative to drive it to one location, determine how to analyze it, and most importantly, develop a plan to act upon it.

For many community institutions this imperative is overwhelming. According to The Financial Brand,5 financial institutions say their biggest impediments to capitalizing on their data are:

  • Having too many data silos—data is not pooled for the benefit of the entire organization (57%)
  • Taking too much time to analyze the large data sets (44%)
  • Lacking skilled data analysts (40%)

But what if community financial institutions could remove these impediments? They can by utilizing an “intelligent” data management technology platform that aggregates financial institution data generated by unlimited sources and makes it available enterprise-wide, from frontline staff to marketing to management. The platform analyzes data from the institution’s core processor, online banking and lending systems (to name just a few), as well as peer and demographic data, and develops automated revenue- and service-enhancing strategies that capitalize on the findings.

The result is better decisions, automated decisions, even instant decisions that generate greater sales opportunities and an overall improved customer experience.

With this data, for instance, your institution can automatically create personalized, targeted marketing and communications campaigns that are triggered when customers demonstrate an increase or decrease in transactional activity. Reduced activity can indicate an account is in jeopardy of leaving the institution. Proactive communication can help reengage the customer and retain the account.

This same data can be used to improve cross-selling objectives and track onboarding activities to facilitate the customer’s journey. It can help create sales opportunities. For example, the data can identify customers who currently utilize payday lenders or other non-bank lenders and generate omni-channel offers for your bank’s digital or other lending products. The data allows personnel to flag follow-up communications on products or services for which consumers expressed interest, but did not open.

Centralizing institutional data into one technology platform also creates vast operational efficiencies by automating once-manual processes, such as new account onboarding, loan origination and underwriting, even customer complaint resolution. It can also help ease introduction of additional customer services provided by third-party vendors by requiring them to integrate with only one data source instead of many.

Financial institutions must put their customer data to work to ensure they offer highly personalized and meaningful customer interactions and services that improve engagement and overall performance. With the assistance of a comprehensive data management platform, community institutions can overcome the hurdles of unlocking the value of their data to achieve “Amazon” success.

1 Digital Banking Report: Guide to Digital Lending, Feb 2018.

2 McKinsey & Company, Analytics in banking: Time to realize the value

(Apr 2017) https://www.mckinsey.com/industries/financial-services/our-insights/analytics-in-banking-time-to-realize-the-value

3 Data Driven Investor, May 2018

https://medium.com/datadriveninvestor/big-data-analytics-in-the-banking-sector-b7cb98d27ed2

4 “Behavioral economics,” Gallup, gallup.com

5 The Financial Brand, “Turning Consumer Data into Dollars” July 2016

Mike Triggiano

Mike Triggiano is Executive Vice President of Product Management & Corporate Development of Velocity Solutions. He is responsible for setting strategic product vision, new product development, business development partnerships, and merger and acquisition strategy. Previously, he held the role of Chief Information Officer at Velocity Solutions.  Mike has more than 30 years of experience in information technology, system design, software development and executive leadership.  He has a bachelor’s degree in computer science and an MBA from Duke University’s Fuqua School of Business.