7 core capabilities for effective customer data management in banking
With consumer expectations and behaviors changing rapidly, banks can’t afford to be caught off guard. It can be hard to stay on top of it all, and building core competencies is the key to success. However, before delving into the capabilities banks should be focusing on, let’s first look at some of the consumer trends that are having a major impact on the banking industry.
The need for speed
Immediate gratification is no longer an unreasonable demand—it’s become a business standard in the digital era. In the past, banks could expect customers to come to a physical branch at set times and wait in line for service, or wait for days or even weeks for a request to be processed. Today, when customers can get almost anything they want delivered to their doorstep within hours, they expect immediate 24/7 service from their banks as well.
Single customer view
When customers don’t have time to waste, they don’t look kindly on having to repeat processes or provide the same information again and again in every interaction with a company. If they have already provided information to one department, they expect everyone in the organization, regardless of their role, to have access to their data and immediately understand their needs.
With so many competitors in the market, untethered by physical location, local residents are no longer a captive audience for banks. That means that banks have to work harder than ever to get new customers on board and keep the ones they have. Data-driven marketing is key in this endeavor. Data enables banks to personalize their offers according to their customers’ needs and preferences, keeping them loyal and engaged.
The omnichannel experience
Customers expect their banks to meet them where they are, even when they aren’t always in the same place. They may choose to interact on the bank website one day, on social media on the next, and prefer to pop by a physical branch for another transaction. They see these interactions as part of one flow, and expect transitions between them to be seamless.
Banks that embrace these trends and build the capacity to meet changing customer expectations will be better positioned to retain existing customers and gain new ones in a competitive market. Things that were regarded as discretionary or of secondary importance in the past have now become core competencies key to digital transformation.
Improved data management is key to addressing all of the trends described above. Let’s look at some of the core capabilities that can help banks build the capacity for effective customer data management.
Core capabilities for effective customer data management
1. Digital customer data intake
Manual data collection, whether it’s using paper forms or PDFs, is a major barrier to effective customer data management in banks. Even when banks utilize technologies like optical character recognition (OCR) to convert a scanned document or PDF into a machine-readable text format, the data is often incompatible with other platforms and technologies used in bank workflows. Moreover, manually collected data can’t be verified in real time. This leads to inevitable errors that slow down processes, frustrate customers, and sap valuable organizational resources.
Digital customer intake, on the other hand, is compatible with all organizational systems, verifies data in real time, and minimizes the need for organizational resources, accelerating processes and eliminating errors. It is the building block of effective customer data management.
2. Consolidating customer data from disparate sources
A customer is likely to interact with multiple departments and business units in a bank. In order to enable the elusive single customer view, banks need to consolidate data from all organizational sources and make it accessible to anyone who interacts with customers. That means collecting data or converting data to a standard format, and creating systems to make it accessible.
Not all data that can be useful to banks is collected directly from customers. There are a variety of open data sources that can help banks supplement their due diligence and Know Your Customer (KYC) processes. These sources are available, accessible, and can contribute critical information, especially when integrated with data that the bank collects directly.
3. Identifying and understanding customer behavior patterns
Every human being is unique, with specific preferences, interests, and areas of comfort. In order to personalize offerings for each and every customer, banks need to be able to identify and understand the nuances of their customers’ behavior. That includes, but isn’t limited to:
- Whether customers prefer to interact online or in person
- Where online they spend their time
- How many interactions are needed to lead them to action
- How willing they are to share information and data
- How tech-savvy and risk-averse they are
It goes beyond simply documenting customer behavior—AI and other types of advanced analytics are needed to effectively utilize the data to predict what each customer will respond to and what he or she is likely to do in the future.
4. Acting on customer insights to drive business outcomes
In a competitive market, it’s not enough to respond to customer requests—banks must be proactive and offer customers services that may be helpful to them. The calculation is simple—if you aren’t proactive with your customers, your competitors will be.
That means that banks need to take the insights described above and translate them into actions that drive business outcomes. For example, if you have identified a customer or group of customers that are tech savvy and open to risk, you can proactively recommend a new investment app to them. If a customer has been identified as unlikely to purchase a service online, they can be flagged for follow-up through a call center. This can be done on both an individual and group level, with the objective of retaining customers you have and gaining new ones.
5. Building a data-driven culture within the organization
People are intuitive creatures and have a tendency to base business decisions on intuition and biases, often ones that they are unaware of. These tendencies distort our decisions, often at the expense of insights based on real data.
Banks can help minimize that tendency by creating a culture that emphasizes the importance of data and demonstrates the value of data in business decisions. It can help to show employees how data isn’t only the purview of data scientists and techies, but an integral part of a variety of types of decision-making processes in the organization.
6. Managing customer data privacy and security concerns
Banks handle extremely sensitive customer information, and customers have legitimate concerns about how that information is being managed and protected, as well as why it is needed.
While tight regulations in the banking industry drive banks to implement strict privacy and security mechanisms and procedures, implementing those regulations isn’t enough in and of itself. It’s important to help customers see and understand how their information is being protected and understand the value they will receive from providing it. Therefore, whenever customers are asked to provide data, it’s important to show them how that data will be stored and used.
7. Continuous improvement of the customer data management process
Technology is dynamic, and the best solution today won’t necessarily be the best available solution tomorrow. Banks need to stay on top of market trends and the technologies created to meet them, all the while continuing to protect customer data privacy from emerging threats.
Improving customer data management starts with the first step
Data collection processes are no longer auxiliary operational issues—they are a core competency in the banking industry. By developing the capacities detailed above, you can make sure that your bank is keeping pace with market trends and meeting changing customer expectations.