How can financial services brands harness the power of big data to create more meaningful experiences with customers?
Since the crash of 2008 the financial service (FS) industry has been faced with increased regulation and restrictions – including the Financial Services Bill 2012 – that would previously have been considered unimaginable. As a result, strategies focused on customer service and experience were largely relegated down the pecking order as businesses focus on compliance.
According to a report published by the World Economic Forum in January, change is now afoot, as some of the world’s largest financial sector companies are currently reviewing their business models in response to the rapid rise of ‘Fintech’ entrants in the sector.
However, whilst the explosion of online services – like new digital banking service Mondo – demonstrates innovation in the sector, it signifies that competition is intensifying across the board. In fact, according to reports on the BBC in October last year, the UK’s FS sector is growing at its fastest rate since 2007.
Brands in the FS space therefore now need to work harder than ever to ensure they stand out from the crowd, as well as continue to rebuild customer trust. This is particularly pressing when you consider insights from the Chartered Institute of Marketing that showed acquiring a new customer is between six and 10 times more expensive than retaining an existing one.
Having a full and frank understanding of customers’ needs and preferences is essential for any consumer-facing business. For FS firms, much like utility companies, it is arguably far more important to get it right, as opposed to in the retail sector, where customers tend to be more loyal and understanding. The fact that the FCA distance selling initiative was called Treating Customers Fairly is telling. FS are under pressure to not just be complaint but to put customer needs as their highest priority.
Establishing meaningful and powerful relationships with customers both existing and potential and providing them with highly personalised content and experiences, is therefore critical.
Data is fundamental to achieving this, but it has to be applied and deployed in the most effective way possible to manifest meaningful results. However, even if you have access to vast amounts of data, it doesn’t mean you are able to effectively utilise it.
So what do businesses looking to make better use of their data assets and become more engaged with their customers and prospects need to do in order to gain a larger market share through customer acquisition or retention?
Insurance, much like taking out a credit or store card for example is often viewed as a necessity purchase or decision, born out of a specific need. It’s typically not driven by the same desire or aspiration as buying a new dress, holiday, kitchen or TV.
FS organisations therefore need to recognise that buying an insurance package or credit card is a cyclical process which has many key defining moments. Firms that understand these important stages, whether it is an anniversary or an impending renewal date, to name just two, rely on having a firm understanding of the customer and what they are likely to be influenced by most. That requires data and insight.
FS organisations also have to be able to identify their needs and perhaps most importantly, what is going to make their customers lives simpler and stress free. Better understanding of individuals not only engenders loyalty, it also attracts new customers, especially if the organisation has been set up with the customer at the heart of all operations. That requires the ability to take that data and apply it across various aspects of the business to drive value and positive, meaningful outcomes.
That said, whilst data is critical to unlocking these insights, businesses need to ensure they are leveraging advanced analytics, campaign management and business intelligence across their entire data warehouse. These capabilities are critical to enabling better decisions to be made, but require specialists with deep insight to form the most valid conclusions.
For businesses like New Day, one of the largest issuers of credit cards in the UK, this is a top priority. The business manages data for over four million customers and provides credit and store card services to a number of leading retail brands. This information is therefore not only a key asset for their business, it also determines the extent of how strong their relationships are with their clients. Without strict processes and the ability to recognise customers effectively across different channels and devices, their ability to deliver a meaningful and targeted service will be impeded.
Investing in an Acxiom solution, which unites their numerous data assets into one consolidated secure environment, New Day has been able to respond far more rapidly to evolving challenges in the market. It’s also equipped them with a scalable solution which can enhance their ability to anticipate the needs of their customers with a greater level of accuracy than they previously had available.
Businesses that can and are focusing on harnessing the power of data and analytics are the champions of tomorrow’s FS sector. Not only will they be able to ascertain a more complete understanding of their customers, and provide them with the reassurance they seek, they will also be well equipped to adapt fast and scale their businesses to changing market conditions. In a sector fraught with regulation and difficult and demanding customers, that can surely only be a good thing.