Customer Analytics: How the Banking Industry Can Grasp Real Value?



Shifting from product-centricity to customer-centricity can reshape banking.

The banking sector is one of the industries dealing with an enormous amount of customer data every day. Today, customer behavior and their preferences are changing rapidly than ever majorly driven by advances in technology and the economic environment. In order to stay connective and competitive in this scenario, financial institutions now will require to consider and build themselves a customer-centricity business with product-oriented ones.

Since banking services providers have internal and external data sources available, these voluminous data can help them guide in product development, establishing communication with customers, innovation and growth. The data can be further accurately assessed through advanced capabilities such as customer analytics. This can provide banks to get to know their customer at a more granular level. By understanding their customers, they can grasp a sustainable competitive advantage. 


Influence of Customer Analytics in Banking

In the foreseeable future, it is expected that the banking sector will witness revenue challenges largely owing to low-interest rates, moderate fee revenue, arduous regulation and a less than robust economy. Thus, it will be more vital than ever for financial services providers and credit unions to shift their focus on all possible strategies that can help lessen costs and boost revenues. 

In this way, integrating customer analytics in their business strategies, they can segment customers effectively, consider a more customer-oriented approach, enable better management and measurement of sales leads across channels, contemplate the inclusion of custom customer incentives or rewards to influence their behaviors, and more.

Customer analytics will not only help banks to predict customer behaviors but also assist in acquiring and retaining them. However, developing and implementing an effective customer acquisition strategy requires banking services companies to have data analytical experiences. They will also require to have marketing and measurement capabilities that will help them acquire customers, automate processing and decision making, manage customer accounts, and minimize customer acquisition costs and risks.

Customer analytics can also be used to curtail risks and fraud management. Its applications in the banking sector have expanded beyond delivering purchase insights, helping in providing details on transaction patterns and even social media interactions. This can also beneficial for traditional risk management including pricing decisions with the integration of structured and unstructured data. 

In the banking industry, undeniably there is no scarcity of analytic applications. As some are more general in nature, some are highly specific outsourced solutions, enabling a buy vs. build decision. Banks use these analytics solutions to gain large market shares and explore several big data sets, such as customer demographics and key characteristics, products held, credit-card statements, transaction and point-of-sale data, online and mobile transfers and payments, and credit-bureau data.