The financial service sector has seen sweeping changes in the past few years, due in large part to breakthroughs in technology and adaptations made in response to the pandemic, and banks are under a tremendous amount of pressure to cater to customers whose wants and expectations are dramatically different from before.
For financial firms to succeed, they must embrace digital transformation and set their strategy based on analyzing and using the mass of data at their fingertips. This data can help them in three crucial ways.
1. Gaining a deeper understanding of clients to cater to their needs
Banks, more so than other companies, have enormous datasets to wrangle. Every swipe someone makes with their debit or credit card is a piece of transactional data for financial companies — not to mention engagement with banking apps, calls to service centers and visits to branches. If banks are able to organize the data properly, they can understand their customers, predict their needs, personalize interactions and more.
No matter if you’re a boutique bank, or a large well-known brand — the key to success is customer loyalty, and that can be fostered by a positive experience. Customers expect their banks to predict their needs and tailor their interactions. With legible customer data, banks can identify and predict trends in customer behavior and create personalized approaches. Historically, banks have been more product-centric, for example focused on pushing credit cards or specific types of accounts. To build value, firms should move toward customer-centricity and concentrate on building brand value. This extra effort will result in happier customers, skyrocketing loyalty and retention, higher engagement and conversion rates and a more substantial return on investment.
2. Connecting with customers at pivotal life moments
Financial services is a lifecycle-based sector. To effectively serve customers, banks must understand what products and services will be of use to their clients at what stage in their lives. Customers don’t make big financial decisions when their banks want them to, but rather when pivotal life moments happen, such as marriage, moving out of state, or purchasing a home. By examining their data, banks can look at different indicators like customer engagements with other products or spending patterns, to anticipate important life events and prepare a product or offer for them in the right time frame.
3. Building a stronger business
If banks can form a complete view of their services based on customers’ usage and transaction data, they can discover where they fall short and how they can improve their business across multiple dimensions. There are many use cases that fall under the data and analytics category: Brands can develop new products and services, have better risk management capabilities and save money with more efficient internal operations. Using data even extends to financial investments: Brands can predict how the market may move and decide which companies or stocks to invest in.
Unlocking the potential of customer data in financial services depends on having a solid foundation of customer data. With that in place, banks can make informed decisions to drive adoption, increase revenue and boost customer satisfaction. But first, they must collect, clean, combine and analyze internal and external data from a variety of different sources. Without the right tools and guidance, this can be quite difficult, and often trips banks up; this is where a customer data platform (CDP) comes in.
A good CDP will help a bank make sense of messy data and turn it into valuable insights, allowing financial service companies to fuel their marketing efforts, cut back on costs and serve their customers better.