The world has gone digital. The world population has become a community of digital citizens living in a global network, always connected and with the world’s information at their fingertips. This changes the way companies interact with their customers, their ecosystem and their employees. A challenging time, no doubt, if you are setting the strategy for a company. But if there’s one industry that can benefit greatly from this paradigm shift, it’s the financial services industry.
This spring, new EMC-commissioned research by Vanson Bourne revealed a number of stunning facts about how our society has changed and on how companies need to change with it. Vanson Bourne refers to the people who are constantly online as the ‘Information Generation’. Made possible by advancements in technology, and with leading consumer companies like Facebook, Tesla, Apple and Nest setting the pace, the information generation expects to engage with the world in exciting, new ways. Whether we’re working, keeping fit, learning, playing, purchasing online or watching TV, we are making new demands of the businesses with which we deal.
This has an huge impact on customer-facing organisations: they need to innovate in an agile way, deliver unique, personalised experiences, demonstrate transparency and trust and, above all, be always-on, and serving customers in real time 24/7. Not every company is well equipped to live up to these new imperatives. Fortunately, the financial services sector has all the necessary assets to make this happen.
Sitting on a goldmine
Financial institutions are sitting on a goldmine of data. Big Data. Which comes fast, in big numbers, and in all flavours and colours. Financial institutions have a lot of internal data, of course: from transactions, loan portfolios, bank visits, voice call logs, e-mails, website clickstreams, web chats, credit card histories, risk assessments, etc. You name it, they probably have it. Most of these traditional relational data – which are neatly structured in databases — are already filtered into tidy, readable reports that offer some interesting intelligence. Yet, the other, unstructured, information – like call centre recordings — is often considered as ‘too challenging’ to analyse and thus often remains untapped. Yet it is precisely there that the best goodies lie, when it comes to unfolding actionable customer insights. Better still when this valuable information is mixed and matched with unstructured information from external sources. Like the information coming from social media, the smart grid, demographic statistics or even weather reports. Just imagine what kind of customised services an insurance bank could offer their customers if they leverage insights from mobile geolocation data?
So much information. So much potential for informed insights, if analysed in real time. So many wise decisions to be made, driven by all this data. So many customers to please with customisation
Service is the new black. As long as it is personal and fast. It is how banks will keep clients from fleeing
When the customer means business
This is all might seem quite controversial – though really it isn’t — coming from a tech company, but we are strong believers in human relationships. Everything should always evolve around what’s best for the customer. And we do not mean that in a marketing – “let’s say that because it sounds good and the others say it” - kind of way. We mean that in a `dry’ data scientific and business strategy manner.
The best way for banks to survive the digital revolution is by using their biggest asset – information – in order to understand how they can serve and please their customers in the best way possible. Service is the new black. As long as it is personal and fast. It is how banks will keep clients from fleeing.
Every action banks undertake should be measured against one supreme metric: “Is this what is best for the customer?”. Or better still, “Is this what is best for the information generation?” For one reason only. If it’s not, (s)he won’t stay. The way to thrive in the financial industry is to opt for customer intimacy. Banks should not let themselves be blindsided by regulations, rules and optimisation of processes and cost. And if you think about it: even those can be viewed as a way to protect and serve the consumer as best one can. For what are government regulations other than a way to protect savers’ interests? Or what are optimised processes other than a way to free up time for a better and faster service?
The other results from this kind of data-driven customer centricity — lowering of operating and infrastructure costs, greater efficiency, increased revenue, a boost in cross-selling, etc. — are necessary and even essential. But they ought never to determine the strategy on their own. Because that is not how banks will be able to keep reinventing themselves for this era of digital disruption.
37% of customers believe that banks understand their needs and preferences adequately
Customer service to the max
Big Data is at its most valuable when it stimulates a 360 degree, customer-focused approach. Which is no luxury, when one realises that only 37% of customers believe that banks understand their needs and preferences adequately. Big Data can allow banks to set the prices of their insurance premiums based on the risk profile of the policyholder: trustworthy payers will then be happily compensated for their dependability and the banks will mostly attract profitable customers. It could allow customers a smarter self-service by offering them far-reaching analysis of their spending behaviour and how it impacts their savings. Big Data intelligence could come in the form of an e-mail to a loyal customer whose daughter just turned 18, congratulating him or her and, at the same time, proposing a profitable car insurance policy tailored to the limited mileage that she is going to be doing (as she has been accepted to a college that lies just a 15-minute walk from her parent’s house and is a member of several green NGOs like Greenpeace).
But it can go much further than that. Based on the data available, financial institutions can actually help the information generation organise and optimise their household budgets, assisting in the process of decision-taking on what companies to work with or where to turn for electricity or gas consumption. Based on spending patterns of other bank clients, extrapolations and comparisons can be made. Of course, Big Brother looms and privacy issues should be addressed before these services are explored.
Taking it a step further, financial institutions might even offer customers anonymised data to work with in their own decision-making processes. That is really taking customer service to the max, and taking an external view on the impact of big data analytics.
Vanson Bourne’s Information Generation survey, revealed that two-thirds (65%) of business leaders acknowledge that valuable insights are driving their organisation to rethink how they do business. As for the financial sector, all elements are now in place to cater to the needs of the customer, thanks to the wealth of information that is ready to be mined and used to optimise customer experience and customer service.
A survey of 3,600 global business leaders across 18 countries asked how technology is changing the world and about the respondents’ level of preparedness for the future. Download the survey.