Financial service businesses are using big data to change the way money is transferred and collected. With more information about the way individuals, companies and even governments spend and invest, banks gain valuable insights about the best practices for managing funds. For business leaders in the financial industry, these conclusions can be turned into new ways to attract customers and grow revenue.
Accepting data-driven practices can help improve profit margins for banking businesses. By spending and saving in smarter ways, money can go further and advantages can be gained over the competition.
Nearly every business these days is focused first and foremost on improving the customer experience. This is especially true for banks. An IBM case study on the impact big data has on financial services found that 55 percent of those in the finance industry with an active analytics team make identifying customer objectives their top priority. When a company knows what its customers want, it can appeal to them in a more direct way.
“Nearly every business these days is focused first and foremost on improving the customer experience.”
In terms of spending, always having the customer in mind is reflected in marketing and customer outreach. A bank can use data to determine the chances a customer will be making a purchases or investment in a stock, based on previous information collected and trends in the market. When the financial institution can anticipate when transactions will be made, the business will be better suited to pitch offers that appeal directly to what a customer is looking for, The Financial Brand reported.
Using big data to improve the overall experience will help a bank see increased loyalty from its customer, while also lowering its operational risk.
Investing in data will have up-front costs for a bank. But in the long run, the insights gathered can change how a business operates and be a profitable investment for the company.
The Oversea-Chinese Banking Corporation has seen first-hand the benefits to reviewing data. OCBC looked at historical data to derive the likelihood of future purchases and understand what its customers preferred, the IBM case study reported. The bank then personalized its marketing communications, including emails, ATMs and direct mail so that customers were seeing more of the items and promotions they were interested in.
The data-backed campaign resulted in a 45 percent increase in conversion rates and a jump in campaign revenues by more than 400 percent. Within 18 months, OCBC had a positive ROI on the data study.
Not every bank can guarantee those kind of results. But by reviewing data, every financial business can develop a stronger understanding of its customers and their specific needs.