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How customer data brings fresh air to wallet share


Today’s banks find themselves in a fight to become a customer’s first choice for growing, changing financial needs. Thus financial institutions should have the highest sense of urgency when it comes to taking a customer-focused approach; they face a myriad of competitors that include mega banks, startups, FinTechs and cheap lenders—all eager to get to know your customer better than you do. And they’re doing it. Now.    

Do you use the data you have (and data you can easily get) to truly serve your customer? Or do you take an inward-looking approach and sell the products and services most important to you? In other words: Do you sell in a vacuum?

As to the former question: Can you identify customers, for example, who pay higher interest rates on their mortgage yet boast great credit score, so you can market a refinancing opportunity? If not, it’s time to join the era of big data so you can amplify your value, and grow your wallet share.

Understandably, not all banks have the resources to turn big data into actionable data. But that doesn’t put you out of the game. Finding the right strategic partner allows regional and community banks to implement a turn-key solution without overextending internal resources.

Products of data: Marketing the right offers

Customer data has many uses but one of the most important enables banks to deliver highly relevant products and services to customers–and even anticipate their needs in ways that can engender loyalty and create brand advocates. Through competitive, relevant product offerings, and targeting the right customers with the right offer, you can improve marketing efficiency and lower acquisition cost. What’s more, this kind of “KYC”—knowing your customer—allows for more accurate creditworthiness assessment. This further fosters product penetration and builds customer trust.

Opportunity rocks: Existing data, meet wallet share

Not surprisingly, banks start with more robust access to customer profiles than many organizations. With existing account history, data from online banking and maybe a mobile banking, your institution already holds big chunks of the customer profile in house. This may include information on when and how they interact with your channels, their income levels and some spending habits. Surprisingly, many banks fail to use this information in a productive manner, nor do they acquire data from any external sources to round out the picture.

The impact of this is clear: This gap in customer understanding manifests itself as poor customer experience, missed opportunity and lower share of wallet. In fact, a CapGemeni study shows that the majority of bank customers (63 percent) are dissatisfied with their bank’s knowledge of them as a customer, or with the product-channel fit (56 percent). The same study shows that only one third of banks actually deploy any big data programs.

Meanwhile, bank competitors aggressively assemble data sets that allow them to analyze and act on saving, spending and borrowing habits to offer well thought-out products at exactly the right time.

Banks must make the most of what they have and supplement that data with other sources to capture (or protect) share of wallet with each key customer segment. Why go to the effort to obtain and analyze customer data? Consider these three key strategies:

  1. Selectively recommend products before your customers have to look for them.  

    Amazon.com has a great formula for recommending books or other products you may like. Banks should take a page from this strategy and recommend saving or borrowing tools that align with customers’ existing needs and financial profiles. Customers receive this approach well because it’s helpful and relevant, and allows your institution to build trust because it demonstrates you know your customers and proactively find ways they can get more out of their money. Trust leads to retention and growth.

  2. Mine account data to make timely offers tied to specific activities or big ticket items. Do your customers pay too much for their mortgage or auto loan? Are business customers ripe for a business loan refinance? Append your existing customer data with predictive analytics from resources such as Score & Report that deliver credit worthiness and other significant customer intelligence so that you can make more competitive offers, save customers money and drive loyalty. These tools give you valuable access to actionable data.

    Here’s an example of how it works: Customers register with the bank’s custom-branded Score & Report mobile banking application because they want to track their credit score or watch for identity theft. Once registered, the bank can access actionable data that identifies which customers are well-qualified for additional banking products such as a car loan, mortgage or refinancing. Without the effort of manual processes or an in-house data analyst, the bank pushes a timely alert about competitive rates, and can make offers with confidence, knowing they have better insight into the risk profile of each prospective borrower.

    The concepts of cross-sell and upsell have taken a hit lately across the industry as organizations have misapplied the terms to justify unauthorized and illegal sales practices. By using data to enable timely, relevant and personalized offers, banks maximize their cross-selling campaigns in a way that truly benefits customers.

  3. Maximize profitability by understanding your customer’s risk profile and financial behaviors. As though you need further reason to be selective about your cross- and up-selling strategies – profitability should also come at the top of your list. This demands you understand your customer first and offer products second. A study at Georgia State University demonstrated that indiscriminate cross-selling is actually highly unprofitable. That same credit data that rounds out your view of the customer boosts your understanding of customers’ risk profile and financial behaviors so that you can segment them by need, risk and profitability. In doing so, you avoid taking on a less profitable customer base that weighs down back-office resources and distracts your focus.

Despite immense competition, community and regional banks still have the opportunity to maintain or regain a key role in consumers’ financial lives. They can do this simply by investing in their habits and offering timely and valuable services—and precisely when customers require them. Consumers are eager to work with brands that understand and consistently meet their needs.

A sales vacuum, by any account, is cold, dark place to be. The journey out begins when you use what you have, and selectively supplement that information to create and serve a full customer profile. In doing this, you and your customers—current and future—trade in the void for a breath of fresh air.    


Kim Fraser is general manager of Wallaby Financial, a Bankrate company. She helps banks use customer data and analysis to drive recurring revenue growth, accelerate consumer acquisition and increase end-user engagement.