Finding Gold in Data: Banks’ 5 Biggest Challenges
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Banks facing increased competition must look at the strategic opportunity in their data
An article in Monday’s Wall Street Journal, “Banking via a Cellphone and a Shack,” got me thinking once again about how banks will be able to adapt to an accelerating pace of change. This article was about Standard Bank’s unique use of cell phone technology to provide branch and ATM services to remote and under-served portions of South Africa.
The WSJ has published several other articles on banks fighting to keep control of their payments franchise, fending off competition from non-bank competitors.
Google is teaming up with MasterCard and Citigroup to embed technology in Android mobile devices that allows consumers to make purchases by waving their smartphones in front of a small reader at the checkout.
Add this technology to increased competition from newer banks and e-trading firms (such as e*Trade) and retailers such as Canadian Tire and Tesco. I am starting to wonder if the biggest threat to banking isn’t exposure to the housing market or tightening requirements on asset utilization. It might be the ability to effectively market in a highly competitive market for scarce retail deposits and fees.
Most banks have smart people on their teams who segment customers and do in-depth analysis on customer habits to understand the next best offers. However, it seems that many still struggle with how to operationalize that knowledge into each customer interaction to ensure customers receive a holistic, coordinated experience, regardless of how they interact with the bank.
Specifically, I see several challenges faced by Chief Marketing Officers at consumer banks today:
- While they have purchased CRM systems that help them analyze their data to create sales campaigns and then create outbound sales initiatives, they are missing data and have limited abilities to address inbound activity.
- The rules used to control key aspects of their products are buried across several operating systems. Six month delays are common for any product data changes beyond the most basic pricing changes.
- These systems aren’t designed to manage product versions elegantly. This means that basic pricing changes require the bank to define an entirely new product.
- Banks do not have methods to treat customers consistently across their selling and services channels.
- When banks sell offers that contain products and services on multiple systems, they have no real way to manage changes to any part of the bundle.
The impact of these limitations can be significant. In studies performed by IBM and Forrester at major banking institutions, we’ve identified benefits to fixing these challenges such as:
- Increasing customer growth rates at 1%
- Reducing customer attrition by 0.25%
- Increasing both average deposit balances and assets under management by 5%
- Reducing fee waivers by 20%
Surprisingly, only a few banks seemed to have noticed the strategic opportunity. I am curious to hear what everyone else is seeing. Please share your feedback below, and register to attend our June 23 webinar with MDM visionary Joe Northern of MD Strategies: Master Data Management: Strategies to Help Banks Drive Business Agility.
My colleague, Jennifer McGinn, recently wrote about 5 Ways MDM Makes Banks Smarter.
Editor's Note: Andy wrote a second post on this topic, Root Causes: The Challenges of MDM in Banking.
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So what exactly is your approach ? from what I see there are a bunch of observations about others are doing
And the 5 ways there some banal things that everyone knows.In case you are the smarter one who discovered them.
A label not supported by the content is just a label.Always.