How to effectively use data collected via digital channels

Especially for financial institutions who used to rely mainly on meeting customers face to face and discussing their financial situation. Getting to know consumers and understanding their needs in this age requires a new approach: data collection and analysis.

How to use data in effective and beneficial way

By continuously analysing the data collected through online banking platforms and third parties such as social media or search engines, financial institutions can help improve their business substantially.

Data can be used for any of the following purposes, thus furthering a company’s interests:

Segmenting customers

Modern consumers expect companies to make their lives easier and their customer journey more enjoyable. By efficiently mining and analysing customer data, banking providers can segment their customers spending habits according to their age, gender and social class and tailor their products and services to each segment, increasing their satisfaction.

Additionally, by segmenting customers, banks and credit unions can learn who their most profitable clients are and the banking choices they make, providing, for instance, the most lucrative products for them to invest in.

Retaining clients

By accessing the right data, companies can precisely estimate the lifetime value of each client, which can be crucial to exploit marketing channels and resources in more efficient ways. It can also reveal signs of customers that intend to end their relationship with the institution and need additional attention or reasons not to do so.

Advancing fraud detection

Online banking does make financial institutions and their clients more vulnerable to schemes and fraud. By furthering Big Data, banks and credit unions and can keep track of their customers’ online patterns and detect unusual activities in a faster way, thus improving their customer service and response times.

Barclays provides a very useful service to their users where they receive an instant notification in case of movement in their accounts statements.

Providing more fitting services

Personalized products and services is one of the most important benefits of data mining and analysis for the banking industry as well as for their clients. In fact, according to a new report from Accenture, 6 in 10 consumers are willing to share significant personal data (location, lifestyle information) with their bank in exchange for benefits such as more-rapid loan approvals.

By creating services better fitted to their customer’s needs and preferences, companies improve their customer’s experience. This doesn’t necessarily mean companies should only provide personalized products such as loans or credit cards, but also tools to, for instance, improve their financial knowledge. Banks such as Barclays and BBVA have created data driven videos to help users open accounts, increase their savings or take out loans.

Improving risk management

Big data can help identify potential risks regarding bad payers or investments. No, it cannot help prevent them fully, but it can stop them from continuing to develop into more dangerous paths, saving institutions millions. Additionally, it can help assess and reduce potential risks.

Virtually every piece of information gathered by companies holds valuable insights on their customer’s behaviours, preferences and things they factor into their financial decisions and can be useful.

The ability of any financial institution to perform accurate data collection and analysis is key to stay relevant, secure their competitiveness in the industry and to keep their customers satisfied.