Luc Burgelman – February 25, 2015
For years, many have viewed retail banking as a commoditized market. When rates are similar across the industry, there’s only so much that banks can offer to distinguish from the competition. Free checking and a toaster when you sign up may have helped banks attract and hold onto customers in the past, but that’s no longer the case. Not everyone wants a toaster, and in many cases, making the same offer to thousands of dissimilar customers is akin to shoving a square peg in a round hole. Quite simply, that approach is no longer good enough.
In a data-driven world, competition to attract and retain customers is at an all-time high. Banks across the globe are beefing up their technological war chests to develop a deeper understanding of customers and to present them with more relevant and timely offers – and to do so faster than the competition. At the same time, competition is coming from new places, including technology companies that are jumping in and putting the customer at the center of the picture.
Gaining a better understanding of and preventing customer attrition is a critical issue for banks. When customers have a tough time distinguishing any real difference between banks, those banks must focus on the customer relationship and increase engagement with the appropriate messages, products and services that customers expect in a data-driven world. Happy customers tend to be loyal customers, and a data-driven approach to improving the customer experience can help banks reduce attrition.
Here at NGDATA, we’re working with some of the biggest banks in the world to solve this problem, helping them to understand their customers in a deeper, more nuanced way by building individual “Customer DNA” profiles for each customer. Understanding Customer DNA allows banks to more easily predict when attrition might occur, providing the means and the opportunity for banks to present more timely and relevant offers. For example, changes in certain metrics that correlate to attrition could trigger personalized offers designed to nudge a customer that may be considering leaving.
Traditionally, information on customers has been locked within functional and application silos that make it extremely difficult to detect early warning signs and take action to course correct in real-time. As a result, banks end up strategizing and operating on only the most basic slices of incomplete information from each individual silo, making themselves vulnerable to attrition.
By connecting all data sources – from ATMs, POS, branch, call center, IVR, mobile, M2M, payment systems, web, mobile apps, social media, etc. – in real-time, we’re allowing banks to leverage big data to better understand customers and ultimately reduce attrition.
What is your bank doing to develop a deeper understanding of your customers’needs? Let us know in the comment section!