A customer walks into the bank to make a deposit, greets the teller and, out of the blue, she’s asked if she would like a second mortgage. Is this any way to serve a valued customer? Not if she isn’t in the market for a second mortgage.
But what if she is?
It’s common practice for banks to widely advertise their low rates on mortgages, car loans and home equity lines of credit, hoping this buckshot approach will hit the right target. The risk is that a weary, oversold customer might take his or her money elsewhere. Big data is now taking the guesswork out of discerning which individuals are the best targets for a particular product.
By using predictive data analytics to interpret a wide range of internal and external data on customers—including their online browsing habits and social networking communications—financial institutions can make more opportune and timely pitches. While this may sound a bit “Big Brother-ish,” the Internet is a vast warehouse of information and the benefits to consumers are considerable—discounted products and services arriving at a time when they are in the market for such goods.
Small wonder a 2014 survey of more than 2,000 business professionals by MIT Sloan and SAS Institute found that nearly nine in ten (87%) are calling for their organizations to step up their use of data analytics. “Some are feeling pressured by senior management to become more data-driven,” the study reports. “They share a common restlessness to elevate their organizations to the next level of analytics.”
Here are four ways that financial institutions can bank on big data in 2015:
1. Creating a customized, consistent customer experience
Every organization wants to ensure its customers receive superior treatment. Big data can assist in this goal by offering the means to better understand what customers want and when they need it.
“Let’s just say that by tapping social media, a financial institution learns that a married couple just had a child,” said Bram Hechtkopf, founding principal of Kobie Marketing. “Not only can the company congratulate the parents, they can introduce the value of life insurance or the benefits in setting up a 529 Plan to begin saving for their kid’s college education.”
2. Dissolving internal silos to have one view of the customer
Many financial institutions already have a vast storehouse of internal information about customers. The problem is this data resides in different places—much of it in the savings and loan area, some in the mortgage department, a bit in insurance, and so on. Each department is unaware of other departments’ business dealings with the customer, reducing cross-sell opportunities.
“The key is to combine all the data about a customer in one place, give everyone access to this information, and use algorithms to indicate potential sales and service opportunities,” Hetchkopf said.
3. Ensuring data insight flows to the right person to make the pitch
Real-time knowledge of a consumer’s potential needs is all well and good, but unless this information is transformed into more personalized service, a cross-sell or up-sell opportunity can be squandered.
If it looks like someone is going to be in the market for a bank product, you can email the customer with a tantalizing offer or have someone in the bank mention it to them in person. The latter pitch is better because it is more personal, but it insists upon information flowing to the customer’s bank representative in real time. For big data to provide big use, one must drive the insights from the analytics to the right people.
4. Using big data knowledge to enhance customer relationships
One way to build a relationship with a customer is to demonstrate a shared commitment to fundamental core values such as support for the environment or clean energy.
“You’re just in a better position to really get to know the person—what they buy at the grocery store, for instance,” Hechtkopf said. “For example, say they buy a lot of organic food. This might be a good time for the bank to tout its commitment to environmental stewardship as a way of nurturing the customer relationship.”
That last point resonates. Business is really a contract between people. The more information the provider of products or services has about a customer, the better it can help. When used to enhance the customer experience, big data doesn’t just offer benefits to financial institutions; it can help all of us.