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Restoring Customer Intimacy with Customer-Facing Analytics

By Jon M. Deutsch, Vice President and Global Managing Principal for Banking, Financial Services & Insurance, Information Builders

Customers gravitate to regional banks and credit unions because they want to establish personal relationships difficult to develop at large national banks. However, as bank branch visits decline and more customers rely on online banking services, smaller financial institutions are losing the opportunity to maintain the personal connections that define their success. Consequently, a new battle for customer intimacy is being fought online as banks and credit unions strive to replicate that same level of personal service through applications, streamlined processes, and business intelligence (BI) technology to gain a competitive edge.

While the growth of online banking is driven largely by improvements in technology, there are irresistible demographic forces at work as well. For the last decade, financial institutions have been repositioning themselves to serve an aging demographic, especially in the credit union sector. A high percentage of new members prefer to bank online. This youthful demographic is a valued target segment for attracting the deposits and loans that are essential to working capital, liquidity, and revenue. How do you get hip to this younger generation?

For starters, you need to connect with people where they are today through easily accessible online services, mobile apps, social interfaces, and personal-productivity tools that help them manage their lives. Leading banks are beginning to use BI technology to bring easy-to-use analysis and visualization capabilities to their customers, along with interactive e-statements and online dashboards. When properly implemented, these online services help to attract new clients and retain existing ones, enriching the relationship, building long-term value, and growing the top line through a less-expensive channel.

Technology that recognizes individuals and responds with customized recommendations and financial plans can begin to replace the intimacy that would otherwise be lost when customers stop coming in to the branch. Since most large financial institutions currently have very generic online banking services, this is an area where smaller banks can really shine.

Looking Beyond Your Four Walls

Most retail banks have amassed a treasure trove of data in their operational systems. It’s time to give some of it back—but it must be done judiciously and in a way that adds real value. The more information the bank can share with its customers – assessment of financial condition and opportunity, aggregated information about the other customers in their demographic, customized portfolio advice – the more intimate the banking relationship will become.

Fiduciary Solutions for Advisors

The marketplace now offers extensive fiduciary solutions to advisors. Investment organizations, along with the many Registered Investment Advisory (RIA) firms, offer to assume the fiduciary status (for a fee) so the advisor can be freed up for other functions. These companies provide services such as specific investment menus for the employer and managed account solutions to participants, where they make specific allocation recommendations based on participant data.

Today, consumers receive access to their checking and savings accounts along with transaction detail and summaries, spending histories, and simple funds transfer and bill-paying services. Looking forward, retail banking customers will also value a “single view of wealth” – including their 401(k), 529, investments, and mortgage – with the ability to visualize and analyze those assets, perform “what if” scenarios, and model future financial goals. Collectively, these services will permit these customers to make better decisions.

Consider an analytic environment that allows customers to easily compare wealth portfolio instruments and totals across multiple time periods, model the impact of different types of investments, and better understand the impact of pre-paying a mortgage or investing in alternative vehicles. In some cases, customers want to see how their portfolios and actions compare to idealized models and to people who are similar to themselves. At a minimum, these tasks can be time-consuming for a household, or simply unachievable. Empowering customers to analyze and understand the mechanics of their portfolios leads to customer satisfaction and loyalty.

BI technology can also help commercial clients by allowing store merchants to view the electronic spend in their business, monitor the up-to-date status of chargebacks, check the progress in clearing and settlement actions, view their merchant bank accounts, and perform other types of online electronic payment services. With a few clicks in a dashboard they can run reports to compare spending totals and trends against their competitors. BI technology makes it possible to better serve individual businesses as well as to provide solutions for business-to-business (B2B) interactions.

Case Studies

Moneris Solutions, a Canadian company specializing in credit-card technology and merchant-processing services, deployed a BI application that allows merchants to view their debit, Visa, and MasterCard transaction data online. They can easily access information about cash flow and consolidated statements, enabling them to spend more time on their business and less time on routine administrative tasks. Not only can these customers review their credit card spending on a monthly, quarterly, annual or year-to-date basis, they can compare their activity with peer companies to discern industry trends with data broken down by market segment. This BI application represents an important revenue stream and is helping Moneris to win new business.

Lender Processing Services, Inc. (LPS), a leading mortgage provider, developed customer-facing dashboards to help its mortgage servicing clients obtain a more holistic view of the loan servicing cycle and comply with increasingly strict requirements. Its analytic offering gives clients a comprehensive view of loan data and helps them identify and predict changes over time. On the back end it can seamlessly combine information from many sources so customers don’t have to run multiple queries to pull data from disparate systems. On the front end it provides dynamic reporting functions and easy-to-use query and graphing capabilities through an online portal. Users can create fully customized and illustrated reports with the solution’s built-in graphics and chart options.

Getting the Right Tools

Once you have identified a solid business model for employing analytics to enhance the banking-customer relationship in retail, commercial and B2B banking, look for BI tools that provide the following capabilities:
  • Interactivity: Even if you are merely delivering quarterly statements online, the data is more valuable if it is interactive. Drill-down, ad-hoc query, visualization, and real-time alerting technology will refresh an online or mobile display and keep consumers informed of important changes.
  • Scalability: There is no sense in developing a rich interactive environment if it won’t scale and perform well enough to support all of your customers. Staring at a spinning ball or hourglass has as much appeal as a telephone operator putting you on hold.
  • Security: Customers visiting self-service websites are concerned about the protection of their data. Fully enabled and auditable PCI security is a minimal requirement.
  • Governance and Quality: Ensure your BI environment includes data governance tools to profile, cleanse, standardize, and enrich the data. You must ensure accuracy in every system that feeds the analytic environment.
  • Usability: In an era of increasingly sophisticated tablets and smart phones, your analytic environment must be easy to use, visually compelling, and make use of common standards and file formats where needed for cross-platform portability.
  • Timeliness: Latency isn’t acceptable in the real-time world of online banking. The BI environment must be coupled with infrastructure to ensure immediate results, generate alerts, and populate dashboards with up-to-the-second information from production systems.
As customers spend time acquainting themselves with your online analytics and experience the attendant intimacy and customization, they are unlikely to defect to a competitor. These premium services have a high “stickiness” factor that grows as customers become more reliant on the relevance, analysis, and insight you deliver to them.

Jon M. Deutsch is Vice President and Global Managing Principal for Banking, Financial Services & Insurance at Information Builders, a New York-based software company that brings smarter decision-making and streamlined processes to leading organizations in industries, worldwide.