Data's Role in Disruption

Olly Sowden

Partnerships Director


How are FinTechs using data analytics to put a punch in their market disruption activities and what trends are we seeing in financial services marketing campaigns? Nick Evans explores.
As consumers are becoming accustomed to the digital experience offered by companies such as Google, Amazon and Apple, they expect the same level of customer experience from their financial services providers.
FinTech companies have exploited this opportunity, creating waves of disruption with solutions that can better address customer needs by offering enhanced accessibility, convenience and tailored products. To keep pace and improve your competitive edge, you must learn to exploit the rich streams of data available today.
By becoming truly data-driven, financial marketers can cultivate individual-level customer relationships and deliver high-impact experiences based on a deep understanding of consumers’ needs, wants and desires.
That’s why data analytics is the modern marketing battlefield, where the war for consumer relationships will be won or lost by marketers, particularly in financial services.
Financial marketers must build their data-driven marketing capabilities now, because the data arms race is only going to intensify. And when done right, you can achieve the same levels of trust and guidance that were — in the past — only possible face-to-face in a local branch, an arena where traditional lenders have an advantage over the FinTech brands.
Here’s what you can do to use the mountains of invaluable data inside your institution to drive better data-driven decisions and provide the evidence of what does and doesn’t work.
Data Management
A good data-driven marketing strategy starts with best practice data management. To win the data management game requires ‘one version of the truth’. All business functions need one data source they can trust and with today’s growing use of marketing dashboards and the focus on managing through key metrics, having one version of the truth is becoming critically important.
Hyper Relevance
The drive to digital has meant that financial marketers have even more detailed information about customers at an individual level. The key to achieving a completely tailored experience begins with a clear understanding of customer interactions across online and offline channels and integrating these experiences into one unique view.
Through advanced analytics we can understand what motivates each customer, how to use their previous interactions to predict future preferences and what content to show each individual customer.
By drilling down into the data on your customers’ interactions with your brand across all touchpoints and devices, you can build up a complete picture of customer and prospect relationships and compete more effectively with the costly face-to-face interactions that branch-based lending allows.
Look Long-Term
Due to the rise of FinTechs, the financial services market is now saturated, and new customers are becoming even more expensive to acquire. In this business environment, lenders need to stop depending solely on metrics such as market share to measure growth. Instead they need to understand customer value – a holistic way to evaluate individual customers in terms of their overall profitability, now and in the future.
Marketing decisions based on value are likely to be different to those based on short-term measures and will focus investment on customer relationships that will deliver over the longer term.
Customer value management starts with the development of a dynamic customer value model that must include estimates of customer cost, revenue, attribution and risk to derive a ‘value’ for each customer.
Emotional Connections
In a recent digital marketing report in financial services by Econsultancy, the top concerns for institutions in relation to disruption in the industry were their inability to appeal to new generations of customers (57%) and an eroding connection to customers (36%).
This means financial brands must focus on creating and delivering a credible engaging customer experience that connects them emotionally as well as financially to their customers. This is one of the key opportunities for differentiation. Investing time, energy and money in the brand and delivering this emotional connection is more important now than ever, because beyond price, companies need to be more relevant, more connected and more in tune with their customers.
When companies connect with customers’ emotions, the payoff can be huge. After a major bank introduced a credit card for millennials that was designed to inspire emotional connection, use among the segment increased by 70% and new account growth rose by 40%.
Embracing an emotional connection strategy requires deep customer insights, analytical capabilities, and, above all, a commitment to align the organisation with a new way of thinking about the appeal of their brand to consumers.
Today’s financial marketers have the advantage of a wealth of data and accountability to make marketing more interesting than ever before. With sophisticated data-driven reporting and attribution modelling, financial marketers can support their strategies with the same business metrics that speak to CFOs and CEOs.
By analysing past campaigns and combining online and offline data, lenders can visualise the customer journey from start to conversion and determine a fairer share of the credit
for each channel – providing marketers with invaluable insight into how different channels are performing and why.
Applying optimisation techniques can maximise return from your investment by identifying the optimum combination of customer targets, products, channels and incentives based on cost and revenue.
In PwC’s Global Fintech Report (March 2016), the vast majority (83%) of respondents from traditional lenders believe that part of their business is at risk of being lost to standalone FinTech companies; it reaches 95% in the case of banks. These statistics clearly demonstrate that disruption of the financial services sector is happening and that FinTech is the driver.
Digital disruption reshapes the way companies and consumers engage by altering how, when and where financial services and products are provided and how each brand is perceived. Success is driven by the ability to improve customer experience, leverage trust and meet changing customer needs, and that can only happen by having a complete understanding of each individual customer.
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