Advanced analytics: Crucial tools for meeting banking customer expectations

Social Business Manager, IBM

According to research by Ovum, cited in Computer Weekly, “More banks see investment in business intelligence and analytics technology as a priority” than see security as a priority. Business intelligence and analytics technologies are becoming breakthrough business drivers. In the face of demands for ever increasing amounts of revenue, banks are recognizing the strategic role that analytics can play in delivering targeted cross-sell and upsell offers on which customers are likely to act.

As Ovum explains, “The ability to use data analytics in near real time to deliver customised and highly contextualised marketing messages, offer management, and other communications, will be the key differentiator in the next round of major platform developments.” Banks that want to stay competitive, continuing to drive business growth, are recognizing that analytics solutions based on customer data are the answer to their problems.

The changing role of financial services role of banks is changing as customers expect ever more from companies. Or, says Suman Kumar Chandra, “Digital banks are no longer in the ‘money’ business but rather in the ‘value’ business.” Certainly it is no secret how digital disruption has altered the playing field for banks and other financial services organizations. But have you ever truly thought about the implications of the fundamental changes that are modifying customer behavior?

In his article “Facing a Blockbuster Moment,” Ryan Caldwell cautions against underestimating the power of new technologies that are challenging an established industry. He warns, “The implications of this shift to digital are groundbreaking. For the first time, innovative financial services companies across the entire nation (and beyond) can steal your account holders.” To illustrates the concept, he adds, “Today, you can pull out your phone between walking from the grocery store to your car and get thousands of search results that show companies fighting to give you what you want.”

Thus the customer experience becomes integral to banks’ daily priorities. Jim Marous, of The Financial Brand, describes several ways that banks are leveraging analytics to cut costs and boost revenue. In particular, Marous explains, banks are using analytics to do the following:

  • Enhance targeting via customer segments.
  • Switch from a product focus to a customer focus.
  • Manage and measure leads and customers across multiple channels.
  • Deliver custom offers and incentives to customers in hopes of influencing their behavior.

Taking advantage of new interactions with customers

How, then, do some of these actions look in the banking industry? Let’s consider an example. In traditional banking, customers receive mass offers. But banks that use predictive analytics to provide customer insight can instead make timely, relevant and personalized offers on which customers are likely to act. How can analytics provide such information? Advanced analytics solutions, such as IBM’s Behavior Based Customer Insight for Banking, take into account transaction history, spending behaviors, demographics, channel use and more.

Or consider another challenge for many banks—access to updated information. Traditionally in the banking industry, employees often act on outdated information as a result of manual data input or of information siloing. But banks that leverage advanced analytics can give their employees access to up-to-date customer status while also suggesting actions—based on behavioral insights from the predictive analytics solution—from which those customers might benefit.

Furthermore, consider overdraft situations. Many banking customers are surprised by overdraft fees, but by using predictive analytics, banks can proactively offer products and services that are valuable to customers whose monthly spending patterns indicate danger of an overdraft. Thus, rather than charging an overdraft fee and ending up with an unhappy customer, banks can cross-sell overdraft protection services and create new revenue, all while enhancing customer lifetime value.

As Marous aptly says, “Understanding customers is the foundation to a sustainable competitive advantage in banking. Therefore, financial marketers can no longer wait to embrace the power of advanced analytics to gain insights and evaluate opportunities that will improve cross-selling, up-selling and enhance share of wallet.” Now is the time to enhance your bank by adopting predictive analytics solutions designed specifically for banking. Or see for yourself in a live demo of IBM’s Behavior Based Customer Insight for Banking solution based on predictive analytics.