Credit Risk

Q&A: How Financial Institutions Can Leverage Customer Data

Q&A: How Financial Institutions Can Leverage Customer Data

March 29, 2019 | Wyatt Jefferies
Chris Atwood

Financial institutions (banks, credit unions, etc.) can sideline disruption and achieve customer growth with better data utilization, according to a recent study by Forrester Consulting on behalf of Equifax. I recently spoke with Chris Atwood, senior marketing officer for Equifax, about how financial institutions can use data to improve their customer experience. Here is that interview.  

Per the recent Equifax study with Forrester Consulting, one of the findings indicates that roughly one-third of companies are collecting data from common engagement channels, such as general transaction history, customer service data or online banking activity. However, less than 50 percent of banking providers are actually using this data to better understand customers and create relevant experiences. Why is this happening, and how can banks harness the power of data to better serve their customers?

ATWOOD: Roughly one-third of banks and credit unions collect data from common engagement channels like online portals and mobile apps. However, this data often becomes siloed or hard to access. In addition, we know consumers are increasingly demanding a more personalized and frictionless engagement with their bank, in real-time. To solve this challenge, banks need analytic solutions in place to help them understand how to evaluate the siloed data. When the data collected is properly understood and deployed, bankers can harness the power of this data to better engage their customers and create relevant experiences for them.

What can banks and credit unions do to build stronger customer relationships?

ATWOOD: Financial institutions have a few considerations, such as creating a consolidated view of their customer. We call this creating personalization, or accurately identifying and understanding your individual customers and their households.  Financial institutions should also leverage the data at their disposal to create contextually relevant offers that fit into the customer’s life needs. Additionally, financial institutions should focus on creating simplicity by removing barriers, simplifying the buying and owning experience. Customers will then understand the benefit of allowing one bank to manage their mortgage, auto and credit card needs.

The research found that banking executives are worried about the changing landscape of the industry, with 40 percent indicating strong levels of concern. Why are so many executives slowly adopting best-in-class technologies and practices to stay ahead of competitors?

ATWOOD: A number of financial institutions (FI) continue to rely heavily on legacy systems. These are difficult to integrate with existing and new platforms. There remains much to learn in terms of how to best leverage best-in-class technologies and practices given budget considerations. However, when the technology is in place, bankers are better equipped to handle data to create the fullest profile of that customer and/or household. These data sets may include credit profiles, income, wealth, purchase behaviors–and leverage time series data compared to static snapshots to identify more dynamic trends and patterns.

Broad and non-segmented marketing practices have been an issue for many years in the financial industry. How can Chief Marketing Officers (CMO) at FIs build stronger customer and prospect profiles for new relationships and upsell opportunities?

ATWOOD: Very similar to what we discussed earlier, CMOs should aim to create a consolidated view of their customers. CMOs can analyze the data to help provide better services and relevant offers. Think about tools like pre-populating applications and other forms based on just a few taps from the consumer. With a consolidated view of the customer, CMOs should be asking questions like:

  • "Why can’t we provide this service to improve their experience?”
  • Or ”How can we leverage advances, such as biometrics, to mitigate the need for constant verification for existing customers?”

For prospective customers, CMOs should look to implement a robust prescreening process. It should paint the best picture of the applicant without causing the applicant to quit mid-way through the process. Again, automation plays a key role here. It has the ability to drive a process leveraging information the applicant entered elsewhere in the application.

What’s the big takeaway for banks about consumers?

ATWOOD: Now, more than ever, customer experience is vital to building and maintaining customer loyalty and strong relationships. Customers want to feel appreciated by their FIs and have comfort that the banks are out for their best interest. FIs can do this by creating positive experiences each time they engage with customers. By leveraging data in a new light, banks are able to meet this goal.

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