Financial institutions are putting Big Data to work in big ways, from boosting cybersecurity to cultivating customer loyalty through innovative and personalised offerings.
Data offers the intelligence to make sure what the client is being offered by the bank has value and relevance to their choices.
Sam Kumar, Global Head of Analytics, Standard Chartered Bank
In years gone by, a typical bank customer – let’s call him Ken – would walk into his neighbourhood branch and be greeted by a teller who knew his name, his family, what Ken did for a living and how best to serve Ken’s personal banking needs.
That was the old model, the way banks earned and kept a customer’s trust. And it served its purpose for a very long time.
Fast-forward to today: Ken works for a multinational that has moved him to several different cities in recent years. Maybe he’s worked two years in Bangkok, then a year in London, then another two years in Dubai. Next stop, Singapore.
No single bank teller in one location could keep up with Ken’s whereabouts and financial doings and know how best to meet his ongoing needs. Fortunately his bank still can, thanks to the new customer service model driven by digital intelligence. For customers such as Ken, data from traditional and digital sources create an electronic paper trail for ongoing discovery and analysis.
It’s called Big Data. It starts with Ken’s historical data such as financial transactions, payment records, credit history and interactions such as with the bank call centre, to create a digitised knowledge base. Then comes behavioural analytics – putting to work all that data Ken has provided to his bank.
Leading banks are making use of Big Data in big ways, from boosting cybersecurity to cultivating customer loyalty through innovative and personalised offerings that make modern banking a highly individualised experience.
Today, personalised banking starts with leveraging this knowledge base to reach previously unattainable customer service insights. Banks can better understand customers’ financial behaviour and anticipate future needs to offer tailored products and services.
But digital is not a destination. It is a path to better customer experience. Banks can analyse, learn from and customise their products and services that are relevant to the specific customer – in real time, when it is most useful, at the point of decision.
And banks can learn a customer’s preferred channel of communication – such as mobile alerts, emails, or traditional paper correspondence.
Let’s say Ken has a mortgage, a checking and savings account and a line of credit.
If Ken has a growing family and wants to build an addition to his house, or set aside money for his child’s university fund, his bank might offer an extended line of credit that is realistic for Ken to help him reach his goal.
If Ken has visited his bank’s website looking for a retirement plan, his bank can come back to him with a plan that can work for him.
If Ken is about to pay off his mortgage, his bank can help create a ‘confetti moment’ for him – by sending a note of congratulations, flowers and balloons, and by offering helpful ideas on how to use the financial windfall, such as a wealth management plan. Predicting life events and upcoming financial hurdles can help banks to develop customer loyalty and meet the real needs of its customers.
In addition, the ability of banks to leverage Big Data and analytics to create an individualised experience is particularly important to the millennial generation. Younger customers show a high comfort level with a digital banking experience – including the speed and convenience of mobile banking apps, backed by personalised service.
Leading banks can develop the same intuitiveness and tailored services for small business, commercial and corporate and institutional banking.
Big Data also allows banks to create new levels of security. Enhanced information protection and cyber security allows Ken to make banking transactions that are faster, easier and safer, from any location in the world. Analysing transactions for fraud across multiple channels, including online and mobile banking, and in real time, means security protections that were previously unimaginable.
Sam Kumar, Global Head of Analytics at Standard Chartered Bank, says technology and data open up new frontiers for banks to improve customer service.
“What it allows us to do is build a very good picture of a client like Ken as an individual – his preferences and financial aspirations,” he says.
For example, Ken’s credit and salary history – which is essential for opening up a local bank account and getting a credit card – can follow him through his bank as he moves from his old home in the UAE to Singapore.
“Imagine how much easier that makes it to give Ken a credit card within a day of his arriving in Singapore so he can go about his business and carry on with his life,” Kumar says. “That’s really where the power of data and analytics starts to come in – it is preference, continuity and matching very specific products and services that will be of value to Ken as a client.”
Several factors allow banks to use data to better serve customers, Kumar says.
First, raw computing power create hardware that is capable of storing the huge amount of data that is generated around the clock in the digital age.
The second is advances in analytical software, the ability to churn that massive volume of data into actionable insights.
Third, there is a massive generation of digital data. For example, if Ken goes shopping and makes purchases at a shopping mall, his bank can respond with real-time offers that are relevant to his spending patterns and interests – down to discount offers at a favourite retailer or his preferred coffee chain.
“Let’s say a client is shopping at a shopping centre, and we see the credit card transaction come in,” Kumar says. “We have the ability to analyse that data in real time, including where he spent the money and on what kind of merchandise. Say he likes to spend money on fashion, jewellery and coffee at Starbucks. I have a set of offers that are available in that location that might be of value to him that I can send out on mobile, such as a 10 per cent discount at Starbucks. You can see how the speed is enabled by Big Data, and the convenience value is there for the client.”
In the same vein, good analytics should mean a customer receives only offers that are relevant to that individual, based on spending patterns and personal preferences – and not blanket marketing campaigns via text alerts or emails that have no relevance to the individual consumer.
“All of this capability created by data needs to work in tandem with a fulfilment capability that really makes the client’s life easy,” Kumar says. “There’s no point in having great insights, great offers and great pricing opportunity if you cannot get that to a client in a way that allows them to fulfil that need very quickly.”
For example, if a bank identifies a customer who wants a credit card, it would be inefficient to then tell that customer to go to the nearest bank branch and fill out an application and wait three weeks. Instead, the bank wants to make the product available as soon as possible.
“The whole ecosystem has to work very effectively, from end to end,” Kumar says. “A large part of our journey within the retail bank is towards achieving that end outcome. Data offers the intelligence to make sure what the client is being offered by the bank has value and relevance to their choices, and to create the opportunity for very quick fulfilment so the client can get on with using that service.”
Banking today is being transformed. Standard Chartered Bank is creating and redefining the digital agenda by innovating from outside in. Read more to find out insights from our leadership and our approach to make banking simpler, faster and better for you.