Data is the key

I’ve recently contributed to an Oracle report, providing the foreword - the report can be downloaded here - and highlights how data is changing the financial services landscape, and how banks can:

• thrive in the face of ravenous competition from digital banks, fintechs and tech players
• build an open banking infrastructure to take the lead in the rapidly growing banking ecosystem
• accelerate innovation to deliver financial services in more agile, accessible, and user-friendly ways
• provide customer-intelligent marketing to shift from milestones to moments
• infuse data into all aspects of their organization to minimize operating costs and risks

As those how read my blog will know, leveraging data, creating a single customer view, dealing with data analytics in an organised way and more are passions of mine.

Data is air.

This imperative to leverage data is becoming more and more important as each day passes, which is why this report is important and, in recommending it to you, I’m happy to share my opening with you.

Banking on the Data Advantage

How banks can transform data challenges into opportunities

I am delighted to be invited to write the foreword for this book. For years, I have talked about banks have the advantage. The data advantage. Banks have the customer data. They can win if they leverage that data correctly, with permissions.

Unfortunately, most banks have ignored this advantage. They have allowed a lot of customer data to disappear or be ignored. In fact, most challenger banks are focused upon using lifestyle financial data to deliver services geared for their customers’ lifestyle needs. Traditional banks should have been doing this but, in most cases, they could not because their systems were too fragmented, siloed and unstructured to achieve it.

The imperative today is to consolidate, rationalise and organise data for more than just risk and fraud requirements. The imperative today is to use data for customer intelligent marketing and service. Then the question has to be: what is customer intelligent marketing and service?

It’s a tough question as it demands that banks use data, with permission, to provide predictive, proactive service without being creepy. Predictive, proactive service is all about analysing data and transactions, and seeing trends and correlations that the customer maybe does not see. My favourite example is the bank that noticed I purchased a subway ticket most days. Over the period of a few months, they could see that I spent thousands on subway tickets and could save a lot if I used a season ticket. Why haven’t I got a season ticket? Because I never have enough disposable income to afford one. So, this particular bank then offers me a season ticket. They tell me I can save hundreds by having a season ticket. Just swipe to get the season ticket. Guess what? I got the season ticket and I love the bank. Having said that, what’s really happening here is that the bank is using our transactional data to analyse our financial lifestyle. It is not offering me a season ticket out of some charitable enterprise, but in order to see me take a loan to buy one. I get the season ticket and save; the bank funds the season ticket, and makes money on the loan.

It’s a win:win for both.

The thing is that most banks don’t think this way. Most banks are dumb with data. Most banks keep data in silos, fragmented across the organisation with no single view of the customer. This is where most banks fail.

The future is one where data will differentiate. Data is the oxygen of the organisation. It’s not oil or any other form of limited resources. It is a mountain of knowledge that needs to be organised, rationalised, sorted and consolidated, so that the financial firm has more knowledge of the customer and their needs than anyone else.

In fact, it intrigues me that most banks fear or are fans of Big Tech giants. Banks should be following them. What they do best is use customer data to create not just sales, but also relationships. They know that you like ABC and that others who like ABC, also like XYZ. So, they promote XYZ to you. It is not intrusive. It is beneficial.

This is the true nature of data leverage. When a bank has a holistic view of the customer’s digital financial life, makes offers and advice based on that life, and does this with permission and acceptance – a critical point as, otherwise, it could be creepy – then there is a win:win street.

This report from Oracle studies that win:win relationship in depth and the five trends identified:

• Customer experience is now king
• Customers are spoilt for choice
• Collaborate to compete
• Reining in operating costs
• Operational risk takes the spotlight

Are critical lessons to learn for the next decade of frantic and cut-throat competition.

I trust you enjoy this report and look forward to engaging in further dialogue over the next few years regarding competition, innovation and service based upon data insights and data leverage.

In conclusion, if you are not fit or ready to provide customer intelligent marketing and service through data insights, what are you fit for?