No matter how large or small your financial institution is, you can absolutely utilize big data and analytics to grow your financial institution. This isn’t a process solely available to multinational organizations; it’s something that any sized institution can use.
Even if your financial institution is already analyzing big data, there’s a strong possibility that you could be doing it incorrectly.
Regardless of where you are in your financial institution’s big data journey, it’s definitely worth reviewing my top strategies and best practices to ensure you’re getting the most reliable information and using it to your best advantage.
CHAPTER 1
What is Big Data in Banking?
Big data is a fairly general term and really applies to a broad range of data available to different industries. Financial institutions can access a wide variety of information surrounding their clients and holistically use it all to increase profitability.
What kind of data should you be looking at? Here are some of the most common big data points accessed by financial institutions:
- Spending patterns and behavior
- Channel usage
- Current product portfolio
- Bank interactions
- Credit history
- Social media
- Customer profitability
The right tools and strategy can help your financial institution leverage all of this information together in order to make informed offers at the most convenient times for the customer.
CHAPTER 2
Using the Right Methods for Breaking Down Big Data
Whether you decide to do your analytics in-house or bring in external professional firm like Achieve Marketing, make sure you’re doing it the right way. Like most large undertakings, there’s a bit of groundwork you need to lay before delving into how to actually use your customers’ data.
But with a sound strategy that covers your bases from start to finish, you can open the doors for your financial institution to maximize relevance and margins.
In this article, I’m going to explain the five most important tools you can use for big data and show you how they apply directly to financial institutions.
CHAPTER 3
#1: Digital Audits
Before you start delving into any type of analytics plan for your financial institution, it’s crucial that you audit your existing data collection efforts to avoid using faulty information. A digital analytics audit looks at how you’re collecting information and, usually, cleans up the majority of it.
The fact of the matter is that the majority of community financial institutions are either not analyzing data at all or aren’t doing it correctly. A thorough review of your data can be done in one of two ways.
For big data beginners, an audit can be conducted from an exploratory standpoint to learn more about who your customers are and how you can fit their financial services needs. If your financial institution has already begun to analyze data, you can do an audit that is designed to uncover a specific issue, like finding out how to make the buying process easier.
A digital marketing audit can look at any number of metrics, depending on your exact goals. For a general audit, you can start off by reviewing your audience reach. How strong is your website traffic and SERP rankings? Are your ad impressions growing? What about your social media followers? If you’re not already tracking this information, then you should start right now.
You can also review your online marketing campaigns. If you’re still utilizing digital trends from a few years ago, they’re likely out of date by this point. The most effective marketing strategies, using both digital and traditional methods, are extremely personalized (which is a large part of why you should be doing data analytics to begin with). An audit of the success of your recent campaigns can shed light on whether or not you’re headed in the right direction.
Finally, a general digital audit should check the success of your conversions. All the web traffic in the world doesn’t make any difference if visitors are becoming customers, and if customers aren’t utilizing your financial institution for multiple services and products.
CHAPTER 4
#2: Market Research
An effective market research plan compares your CRM to the data on your website and identifies any potential correlations. It looks at leads coming in and analyzes what decisions are being made throughout the buyer journey. This type of research is so informative because it sheds light on how people actually act, not how they say they’re going to act. You could send out a survey to 1,000 customers and ask what financial products they think they should have, but that doesn’t mean they’re going to sign up for one tomorrow.
Another comparison is the suggestion box in the teller line. People are more likely to share bad experiences than positive ones. That doesn’t mean they’re not having good experiences, but we’re all naturally hardwired with some degree of negative bias.
Market research circumvents these proclivities for bias by solely focusing on user actions. It can help inform your cross-selling techniques as well as new customer acquisition. In fact, both ways analyze the same data, we just look at them in a different manner.
By honing in on your market research, you can begin the customer segmentation process. In an interview with BankDirector.com, Jeffrey Lee, Seacoast National Bank’s chief marketing officer, has revolutionized how the Florida bank handles its marketing — all because of data analytics. In a way, it’s shifted the entire bank’s way of thinking.
Here’s what Lee had to say about customer profitability: “‘You ask someone in the branch who their best customer is, and they say it’s the person who comes in every day,’ says Lee. But because it costs a bank more to service these customers compared to those who bank remotely, Seacoast’s profitability model comes to the opposite conclusion. ‘It’s a big cultural change because there are perceptions that don’t always align with what the data tells you.’”
CHAPTER 5
#3: Customer Journey Maps
Leveraging your market research, your next step is to create a customer journey map. This is a visual representation of how leads and customers adopt and use your products. Not only do you map out each different touch point from the customer’s perspective, you also map out potential progressions and needs in his or her personal life.
You can actually achieve real-time analysis in order to deliver the best offer at the customer’s point of decision. A journey map also shows you how you can simplify interactions with your financial institution to make them more user-friendly. Your ultimate goal is to make things easier for your customers so that any remaining barriers aren’t anything within your sphere of influence.
While it may sound simple, this can be quite an in-depth process. You’ll want to start by developing different personas for your various customer segments. Use your market research to begin with the warmest leads. Say, for example, this ends up being young married couples. You’d choose the different relevant financial products they could be interested in — maybe a mortgage, a 529 savings plan for their potential young children, and some retirement funds.
For each product, you’d then create a separate customer journey map that outlines their access options, education process, selection process, financial verification, the actual purchase, and completion. You literally end up with an extremely informative document that takes a customer-centric approach no matter where and how they’re doing their financial shopping.
Of course, the entire process isn’t a manual one. Customer journey mapping can also involve technology platforms that prompt staff members. You can even integrate your own client personas so that the entire process caters directly to your financial institution's demographics.
Not sold on the ROI of customer journey mapping? Research from BCG Perspectives has revealed that some financial institutions are reporting 25% revenue increases and up to a 40% productivity increase.
CHAPTER 6
#4: Competitive Analysis
Not only should your financial institution focus on internal audits and research when it comes to big data, you should also look at external drivers — including your competition.
Like all things with big data, you have to break it down into smaller, more digestible segments. You need to look at your financial products individually to determine where else your customers can go. It’s necessary to define both competitors to whom you’re losing business, as well as those from whom you’re successfully taking business.
And while your financial institution may be accustomed to performing internal SWOT analyses, you can also do this for your competitors. Information is useless unless it’s placed in the right context. So in addition to determining your own strengths and weaknesses, threats and opportunities, see how yours compare to the competition. This will provide you with much more meaningful insight than just looking at your own financial institution.
Competitive analyses are also becoming increasingly important for financial institutions without specific customer requirements. When you simply have a community charter, the scope of your competition broadens greatly — and even includes other financial institutions.
CHAPTER 7
#5: Process Perfection
Big data analysis starts with evaluations and planning, but all of these processes should be continued on a regular basis. In fact, I recommend a weekly evaluation process so that your financial institution can stay up to date with exactly what your customers need. Rather than running just a few marketing campaigns a year, you can have constant ads running at the same time, each individually targeted to the right people.
Many financial institutions who are truly committed to maximizing returns with big data hire a full-time position devoted to data analytics. Others bring in a third party expert that can perform ongoing tasks or ala carte projects as they come up.
Whichever route you choose, I hope you understand the importance of investing in the right analytical tools, even if it’s as simple as Google Analytics. Breaking down big data creates greater efficiency while ultimately providing a better user experience for your customers.
At the end of the day, your financial institution is only as strong as the relationships you build with your clients — and in today’s tech-driven world, utilizing big data in an intelligent way is the most effective means to achieving this worthy goal.