In the topsy turvy world of big data, it has become apparent that some industries are unexpectedly lagging behind others in their data mining capabilities.
For example, one would be justified to assume that financial companies, given their access to vast amounts of customer profile and transaction data, are leaders in this field. However, the industry can be divided into two camps.
On the one hand are the traditional global banks and insurance firms, which continue to lumber under a mountain of new, legacy, proprietary, departmental and country data systems that do not communicate with each other.
A good example of this is Deutsche Bank, whose CEO, John Cryan, noted at a recent press conference that, “…about 35 percent of the hardware in the data centers has come close to the end of its lifecycles or is already beyond that”. Jost Hopperman, vice president of banking and applications and architecture at Forrester Research, claims that the problem is widespread, “The situation at Deutsche is not unusual at many other large tier 1 or tier 2 banks simply because many of them have similar issues, including too many silos, too fragmented outsourcing, and lost control of applications”.
On the other hand are the new and nimble digital-only banks, the likes of US-based Ally Bank and UK-based Atom Bank. The latter, even before its launch, targetted for early-2016, has received a 45 million pound investment from Spanish bank BBVA. According to Atom Bank CEO, Mark Mullen, the bank aims to be as disruptive to banking as Uber has been to taxis.
Assuming that brick and mortar banks are able to overcome their data woes and to unify the volumous data currently sitting untapped, then opportunities abound for to them to catch up to their retail and online counterparts.
Top of their list of priorities must be the use of data to achieve a meaningful 360-view of the customer, as a necessary step towards re-imagining the customer experience. While the airlines industry is not obvious as a trend-setter in this field, a number of airlines have started to take customer-360 initiatives to heart.
Southwest Airlines, British Airways and American Airlines, for example, all employ mobile apps to keep frontline staff informed in real time of individual customer circumstances, whether this be food preferences, flight delays, or complaints on social media. These airlines, through a process of trial and error, have also determined the limits of communicating personal data (favourite drinks are okay, pets’ names are not). This “know me on the go” approach is one that could easily be adopted by bank tellers and advisors when dealing with their customers, but remains sadly lacking.
There are other transferable practices. In June this year, Qantas launched a programme for frequent flyers, rewarding them with extra points in exchange for information on their consumer habits. This data is used not only within the airline but is shared (in anonymised form) with partner organisations, for example hotels and car rental services. Banks’ credit card businesses have the opportunity to do the same, and to share this information with their merchants, but again, this is not yet common practice.
Finally, in this age of algorithms, banks, like airlines, can do more to target products to specific customer types. United Airlines has sought to connect together its 3.5 petabytes of customer data in order to use it more effectively. For example, according to executive vice president of marketing, technology and strategy, Jeffrey Foland, sales of United’s economy-plus seats have surged since the airline started using data to target fliers who are more likely to buy them.
This kind of sophisticated customer analytics comes on the back of well-rounded data on an individual, linking together his/her buying patterns with his/her demographics, personal preferences and lifestyle. Many banks have made strong strides in their “digital revolution” journey. But only those able to capture customer data as a consolidated whole are likely to enjoy the customer loyalty and ROI results they had hoped for.