The value of SKU-level data during COVID-19 (and beyond)

With heightened concerns around public spaces and shared surfaces, branch banking might never be the same. Customer data that was once gathered via in-person conversations over the teller counter may rapidly decline, if not cease to exist entirely. In response, banks must find effective ways to collect relevant customer information and facilitate meaningful engagement in the digital domain.

Banks mostly use surface-level information to know and understand their customers. Data like demographics, channel usage and transaction history fail to evoke an adequate idea of who a customer is and the full scope of their financial needs. These issues have become even more transparent during COVID-19, as purchases are now largely homogenous. Think about how many Amazon and DoorDash receipts will appear on card statements this month, revealing little to nothing about the individuals that made those transactions.

As the pandemic continues to hasten the shift to online shopping and e-commerce, the need for context around buying behaviors will intensify. It’s time to dive below the water line, going deeper to learn more about preferences, brand loyalties, life stages and timely financial needs. Alternate, contextual data points are necessary to close the wide gaps.

While banks have traditionally used purchase data to help build customer profiles, this data point alone is not enough. For example, noticing that a customer spent $100 at Walmart provides very little insight into their habits, behaviors or preferences.

On the flip side, being able to delve into the SKU-level data – not just what’s on the receipt but details about what was purchased – can uncover meaningful context. Take that same Walmart example – being able to see that a customer spent $100 at the store on diapers, formula and onesies paints a much more specific picture. The banker learns that their customer likely either recently became or is soon to become a new parent, providing the opportunity to proactively reach out about 529 account information and options. Such behavioral insight can propel banks into the realm of real-time marketing and engagement.

Gathering better customer information also enables banks to identify those who have traditionally been underserved. For example, gig workers are commonly camouflaged in consumer accounts because business accounts are too complex and/or expensive for their specific needs.

Contextual data points can help identify red flags to pinpoint this segment. Frequent trips to gas stations might reveal an Uber driver. Large office supply purchases might indicate a self-employed individual. Recurring deposits from Square or Etsy might uncover an entrepreneur. Only once these workers are known to be part of the gig economy can bankers provide the relevant tools and services for their unique circumstances. Such detailed insight enables deeper micro-segmentation, facilitating not just more pertinent cross-sell opportunities but also a chance to provide narrower financial education and create new categories of customer profiles. This is especially critical now, as the self-employed sector is one of the hardest hit by COVID-19.

Just as the pandemic is thrusting digital forward as the primary touchpoint, it’s also threatening to dilute banks’ competitive differentiator: trust and personal relationships. Bankers will likely no longer enjoy face-to-face conversations with customers and families as frequently, which has the potential to be devastating to their business models.

The trust and service factor has been a traditional hallmark of banking and one of the main reasons that attempts by tech companies to infiltrate the financial services landscape have historically fallen flat. As major companies like Amazon use the pandemic to enhance their own trust value by providing money and resources to those in need, banks may find themselves in hot water.

However, hope isn’t lost. When personal interactions are limited, digital interactions must be more insightful and customized. Digital innovations that were once considered ‘nice to have’ have quickly become necessities. Tools such as digital receipt and expense management, loan products, PFM and life management solutions will all be more critical in the coming months as a significant portion of the population enters survival mode. Taking steps to better know and understand customers now will help insulate banks from threats in the future.

Banks have proven time and again that they’re adaptable. Now is the time to adjust their engagement models and step up to the plate to provide guidance, relief and relevant digital tools in the face of the pandemic. Such efforts can help fill the void and protect what has always set traditional financial institutions apart from non-bank competitors.

Corey Gross is co-founder & CEO of Sensibill, a digital banking solutions provider based in Toronto.

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