Two of the more high profile themes in retail banking last year were improving the customer experience and big data. 2015 is the year when we’ll see these topics merge.
That said, many banks will stumble in their efforts to use big data to achieve a higher state of customer understanding, or even the less lofty goal of a slightly larger share of wallet. These institutions will spend valuable resources not knowing who needs what data, or how to effectively access it. My suggestion for these banks is to take a step back and take a look at the wealth of data currently flowing through all their retail banking channels, specifically, transaction data.
For banks concerned about the customer experience, transaction data is an invaluable source of must-have intelligence. Consumer transactions are an “always on” data source. Each one travels across an ATM, point of sale, mobile or internet banking environment providing insight into what the customer is experiencing, how networks and applications are responding and what the business value of each transaction is from a revenue or service perspective.
There are two particular groups within the bank that most benefit from leveraging transaction data: first, business managers or chief data officers responsible for channel profitability and the customer experience and, second, operations and support teams, who are responsible for ensuring the highest possible availability and performance.
The first group can use transaction data to gain a customer-centric view of how the institution’s self-service devices, such as ATMs and mobile, are being used. With easy, on-demand access to structured transaction data, these teams can gather statistics and analyze information such as:
- The types and locations of transactions being performed by top customers in order to improve service offerings;
- The number and locations of transactions being performed to determine better self-service device placement decisions;
- Transaction dollar withdrawal/deposit amounts by device, for more accurate cash inventory and replenishment schedules;
- Transactions broken down by service and card types, for more accurate profitability reporting; and
- Transactions broken into on-us versus off-us traffic, for data-driven customer acquisition strategy development.
The operations and support teams, meanwhile, optimize the performance of all the host authorization and third parties (connections, applications, networks, etc.) that make up a bank’s payments environment. They can leverage real-time transaction data monitoring, alerting and profiling to be more proactive, which helps their ability to research and fix performance issues. And because transaction data contains rich information such as application response and request times, network connectivity, response code errors and application message or meta data such as terminal ID, transaction status and amounts, operations teams can benefit from one stop, end-to-end visibility into all the data they need to manage their end-to-end transaction networks in a timely, cost effective way.
Last year, one of the largest banks in the Middle East deployed a technology solution that gave them real-time access to the data contained within every transaction flowing through their ATM network. The bank’s Information Technology Operations teams and ATM line of business executives now have easy access to transaction data, made accessible to them through configurable dashboards, alerts and analytics. Some of the results: data mining efforts that previously took days or weeks are now completed on-demand in minutes; the ability to react in seconds (rather than hours) to consumer-related transaction issues; and access to over 30 consumer usage and transaction performance statistics customized to their own ATM environment.
With access to detailed transaction statistics, the bank’s operations and business teams produce accurate monthly transaction volume and ATM client profitability reports that capture every consumer transaction type and card type per-ATM. By analyzing consumer usage patterns, the bank is able to better optimize their service offerings and lead marketing campaigns targeting off-us consumers in efforts to convert these ATM users into new, higher-margin, on-us customers.
For all these reasons, I expect that in 2015 more financial institutions will develop strategies to effectively get “trapped” data out of bank channel networks and silos and into the hands of operations teams and strategic decision makers. The most successful of these banks will be those that find ways to gain real-time access to their transaction data and leverage it to reduce operational support costs and make data-driven decisions to enhance both customer experience and line-of-business profitability.
Mr. Borbas is vice president of Product Marketing for Canada-based INETCO Systems Ltd., a leading provider of transaction monitoring and analytics solutions for banking and payment processing industries. He can be reached at firstname.lastname@example.org.