It’s becoming increasingly clear that in the digital age, giving customers good user experiences is more important than ever. One of the most reliable ways they can create those experiences capable of retaining current customers and attracting new ones is by generating 360-degree (complete) views of them. In short, a 360-degree customer view is a single, holistic picture of any single customer’s journey that’s easily accessible and readable.
Having 360-degree customer views is foundational to growth, customer retention and attraction, and risk management for banks and other traditional financial institutions. The data used to create those views comes in the form of hard data (transaction histories, account data, etc.) and soft data (data that is woven into hard data that indicates a customer’s emotional constitution or habits).
Understanding how to collect and analyze soft data allows banks to combine those types into one set of comprehensive information that can then be analyzed by data analysis experts. With that information, banks can create 360-degree customer views that allow them to understand more fully who their customers are, what makes an ideal customer, how more ideal customers can be targeted by advertising and how to improve user experience (UX).
Consumer trust and banking in the digital era
The digital era and innovations such as technology in the financial services industry (FinTech) have created tough competition for traditional financial institutions such as banks. According to recent research,71% percentof customers would rather go to the dentist than listen to what their banks tell them. Another 53% don’t think their bank offers anything other than basic banking services, and one out of every three individuals surveyed said they were open to switching banks in the next 90 days. FinTech targets those individuals, giving them a service other than banking to rely on for their financial needs.
The rapid rise of FinTechs such as PayPal that take advantage of the digital literacy of Millennials and Gen Zs to generate capital in the financial sector further illustrates the desire of many younger consumers to move away from banks. FinTech provides consumers with an array of services and products, from financial advisory to payment collection, that allow them to avoid using banks, a fact highlighted by the willingness of the average consumer to switch banks with little consideration when it seems convenient to do so.
More than ever, banks must find comprehensive, reliable ways to retain current customers and attract new ones. By using customer data collection and analysis, banks can create360-degreecustomer views that allow them to improve user experience dramatically, keeping current customers on board and enticing the right kind of other customers to come into the fold.
According to The Financial Brand (2014), banks only use a small portion of the data to generate insights that would enhance customer experiences. The article points out that banks that apply big data analytics have a 4%point lead in market share over banks that do not. Not only does providing a great experience help you to keep customers but you can also charge more for your service. According to PWC, companies that are excellent at creating brilliant customer experiencescharge a 16% premium on their services.PWC found that 32% of the people they asked said that, after just one bad experience, consumers would stop doing business with a brand or company they’d previously loved.
By using analytics to build a customer 360 degree view, banks can take timely action to prevent loss of customers and also expand business by cross selling and up selling to existing customers. There are innumerable statistics that corroborate the need for building a customer 360 degree view in banks- for instance, timely risk mitigation measures become possible to guard against loans going bad- currently around12% of monthly credit cards will fail. Further, according to Zendesk,79% of high-income earners shunned a companyfor more than two years after they had a bad experience. Justone in 26 customers makes a complaint when they are unhappy. All the remainder churn without saying a word. If the bank is aware of the risk of customer churn, the bank can take churn prevention measures.
Banks and data lakes, why data means nothing if you can’t use it
Most banks collect data constantly, and at a glance, that infers that creating a 360-degree customer view using actionable customer data may be simple for them.The truth, however, is a little more complicated.
The data banks collect is generally diversified across several systems. For example, the credit card services, sales and marketing, loan origination and servicing, and core banking departments collect noticeably disparate data that is often siloed across several lines of business. To complicate matters further, useful data such as calls, voicemails and texts is unstructured and often is not entirely collected. In essence, banks often collect far more data than they actually need and fail to collect that data in a way that allows it to be usefully analyzed and accessible.
Customers may view banks as a singular entity they do business with, but those who work with banks know that view is rather detached from reality. Many banks even outsource certain departments, such as IT and customer service, meaning they can’t even collect data from those departments. Or, if they do, they have to jump through several hoops to get access to it.
In addition, most banks use data lakes to collect and store customer information. While there’s nothing inherently wrong with the data-lakes concept, many companies use them because of their usefulness when it comes to generating data that can be analyzed to create actionable information. According to aForrester Research survey, however, only 12% of all data collected is ever analyzed by businesses. In other words, most of the data that banks collect is either so useless that it fails to warrant analysis, or so hard to aggregate that they make no attempt to analyze it in the first place.
Storing data from various departments in isolated data silos does nothing other than create huge amounts of data that is mostly useless, difficult to sift through and can’t even be reached toimprove UXsbecause of delaying restrictions on data silos and lakes.
Any bank interested in creating complete customer views should focus on collecting only that data they have verified with data analytics experts to be useful. In addition, that data should be collected at a single source accessible across departments so it can be acquired quickly and analyzed constantly to generate actionable information that can be used to improve business practices, increase general UX and create those 360-degree views.
How banks can use 360-degree customer views to survive in the digital age
Renovating data collection, and handling and analysis practices, particularly for organizations with as much customer data as banks have, in the name of a new idea such as360-degree customer viewsis no small thing to ask. Also, 360-degree customer views are not simply created by unifying data collection and handling methods. The useful aspects of that data must also be comprehensively analyzed and compiled to create a complete customer view that is useful not only to the bank, but also to the customer. Having an intelligent, context-sensitive customer view is more important than having large amounts of data.
Developing complete customer views allows banks to understand who their customers are and create personalized UXs for them based on their data. The views can also create invaluable avenues for them to make current and potential customers aware of the different products and services they offer.
For example, banks can easily use data to figure out whether a customer is a first-time homeowner or a couple that has just started a family. If a bank provides financial advisory services, there’s a good chance that first-time home buyers would be interested in understanding how they can manage their mortgage or create a schedule to allow them to pay it off in a timely manner. Similarly, couples with a new child may be interested in learning about life insurance options or opening a savings account for college funds.
In both examples, a bank has collected and analyzed data that allowed it to develop a complete view of different customers. As a result, it was able to offer them access to services that simultaneously increased the customer’s UX and provided the bank with additional revenue streams.
Underestimating thepotential of 360-degreecustomer views to combat rival FinTech services would be ill-advised for banks striving to succeed in the digital age. The reality is that most medium-size and large banks already offer many of the services FinTech platforms supply. The reason customers turn to FinTech usually is rooted either in the fact consumers are not aware of all the services their bank offers or they distrust the quality of its service because of poor UX. Creating complete customer views allows banks to combat both competitions comprehensibly and reliably.
Banks are always at risk of losing customers and need strategies that are dependent in identifying the right action to the right customer. By using analytics to build a 360 degree customer view, banks can find the right customer approach towards determining pricing, products and services. Using a 360 customer view enables banks to service individual customer needs through a personalized marketing approach, while keeping the marketing costs low. Banks can also use data to monitor which types of people make the best customers, allowing banks to drive marketing campaigns more-accurately targeted at those demographics. Using customer data to create complete customer views results in creation of UXs that make customers feel respected and acknowledged. In other words, those views enable banks to lower their customer attrition rates dramatically and increase customer loyalty, driving long-term business value.
In conclusion, evidence is mounting that suggests banks that fail to build 360-degree views of their customers will fail in the digital era. By reforming and improving data collection, and handling and analysis practices, banks can improve their UX and create those complete customer views that foster increased loyalty and retention. And, they can attract more of them in the future.
The key for any bank interested in leveraging data to create 360-degree customer views lies in using cutting-edge technologies and design practices, data collection and analysis services. For banks interested in creating 360-degree customer views, Pegasus Knowledge Solutions, Inc.’s (PKSI) innovative approach using modern data architecture methods makes it easier to integrate and manage data across customer journeys. To learn what PKSI can do for you,click here.
Bonnya Mukherjee
Financial Analyst, Pegasus Knowledge Solutions
