Using Big Data To Predict Online & Mobile Banking Needs

Investing in online and mobile channels was not intended to simply provide additional channels for customers to access their accounts. The promise of reduced costs, increased cross-sales and enhanced service was the objective for most banks.

The good news is that online and mobile channel adoption is very high, meaning that customers are downloading mobile banking apps to their phones and creating online access points at a high rate. Unfortunately, that’s where the momentum has stopped.

Third in a Series on Big Data in Banking

Instead of migrating more expensive interactions to less costly channels, consumers have actually increased their total interactions. “In talking to all types of banks across the globe, we’re hearing a similar story – customers are signing-up for online and mobile banking, but calls into the call centers are not decreasing at any noticeable rate,” says Ido Ophir, head of products at Personetics. “People are still calling with transaction-related questions and even account-level questions.”  

A recent industry report revealed that more than 30 percent of customer service calls were preceded by an online visit. That’s a large percentage, especially when the vast majority of these questions can easily be answered in the digital self-services channels.

Based on the numbers being reported by large banks, while they have several million signed up for digital banking services, less than 10% are using mobile banking in any real capacity each month. So, while banks have done a great job of signing up consumers for online and mobile banking, customers are not fully leveraging what these self-service channels have to offer. The utilization problem actually goes even further - most customers log in to check balances or look at individual transaction details, but only a very small percent use in-depth or multiple features like funds transfers and check image deposits on a regular basis.

Source: Board of Governors of the Federal Reserve System  - Consumers and Mobile Financial Services (March 2013) 

The question is, what’s stopping them?  Is it that:

• They don’t want anything else? . . . Show me the balance and I’m done.
• They can’t find what they’re looking for? . . . They get frustrated and leave.
• The service they want isn’t offered? . . . Only high-level transaction inquiry; no detailed information.
• They aren’t sure what they’re looking for? . . . Expecting better personal guidance.
• They don’t know what to do or where to go? . . . Poor user interface.

Online Banking Key To Satisfaction and Growth at Credit Unions

According to recently released research, credit unions continue to score higher than banks in six key areas that have been found to drive customer satisfaction.

Interestingly, however, while lower rates and fees are still a significant component of a positive member experience, the impact of improvements in the online/mobile channel delivery will have the greatest impact on increased customer satisfaction in the future.

CFI Group, a customer satisfaction technology and analytics firm, in an inaugural study entitled "2013 Credit Union Satisfaction Index," measured six primary drivers of customer satisfaction on a 0-100 point scale and found that credit unions consistently scored high in all categories, with each driver scoring in excess of 80 points. This score was higher than many other industries including retail banking. 

CUSI Satisfaction Driver Scores

Of the six drivers of satisfaction measured, however, the 2013 CUSI found that only four play a significant role in driving member satisfaction and, therefore, should be the focus of the industry. At the top of the list for primary drivers that could impact future satisfaction were "online banking," "branch staff," "branch convenience," and "information/communications." 

The chart below illustrates the contribution of each primary driver towards increasing member satisfaction. The two missing drivers of satisfaction ("rates and fees," and 'products and services") have already 'maxed out' as a driver of additional satisfaction according to the study, thereby limiting any the impact that an improvement in these two drivers would have on future member growth.

Driver Contribution to Increasing Satisfaction

Banking Industry Taking Small Steps With Big Data

As was discussed in the first of my series on Big Data in Banking, the financial services industry has a vast reservoir of data on their customers, but is in the infancy stage of utilizing this data for financial or competitive gain. 

A new study published by the IBM Institute for Business Value confirms that while the majority of financial firms believe data can create a competitive advantage, the scope of data used and the analytic capabilities lag behind other industries.

Second in a series on Big Data and Banking

In a study published by the IBM Institute for Business Value in conjunction with the Said Business School at the University of Oxford entitled, "Analytics: The Real World Use of Big Data in Financial Services," it was found that 71 percent of banking and financial firms globally believe that the use of insight and analytics creates a competitive advantage, compared with 63 percent of cross-industry respondents. This compares with only 36% reporting this advantage in 2010, representing a 97 percent increase in just two years.

Pragmatic Customer-Centric Strategy

Not surprisingly, the IBM research found that most 'big data' strategies being implemented by the financial services industry begin by initially identifying business requirements, then leveraging existing infrastructure, data sources and analytic capabilities before incrementally expanding sources of data, technology and analytic capabilities. This 'slow to go' progression is actually on par with the global cross-industry counterparts reviewed.

Customer Analytics Is Key To Growth In Banking

Understanding customers is the foundation to a sustainable competitive advantage in banking. Therefore, financial marketers can no longer wait to embrace the power of advanced analytics to gain insights and evaluate opportunities that will improve cross-selling, up-selling and enhance share of wallet.

Financial marketers also need to extract more value from internal and external data sources, guiding product development, customer communication, innovation and growth.

First in a Series on Big Data and Banking

In a recent report from Celent entitled, "Customer Analytics in Banking: Why Here, Why Now?", senior analyst, Bob Meara writes that now is the time for banks and credit unions to leverage the advances in processing, memory, database design and analytic methods to improve performance and reduce costs. While the Celent analyst notes that some institutions are already on the path of using advanced analytics for decisioning and optimization, other organizations have only limited experience (this correlates with several other studies).

The following are the primary reasons why banks need to step up their customer analytics game:

• The New Normal: The banking industry is expected to remain revenue challenged for the foreseeable future as a result of low interest rates, moderate fee revenue, onerous regulation and a less than robust economy. As a result, it will be more important than ever for banks and credit unions to focus on all possible strategies to reduce costs and increase revenues. Some of these strategies, enabled by customer analytics include:
• Improved targeting of customer segments
• Moving from a product focus to a customer focus
• Better management (and measurement) of sales leads across channels
• Inclusion of custom customer incentives/rewards to influence behavior
   
• The Imperative for Customer Centricity: With customer delivery and communication channels expanding, and more customers interacting with their financial provider using online and mobile channels, always-on, real-time sales and service become imperative. Analytics can respond to the migration to digital channels by:
• Improving branch efficiency and effectiveness
• Integrating sales and service tools within a new digital environment
• Helping to drive high value, high touch traffic back to branches
• Technology Advancement: Customer analytic applications are no longer the sole domain of highly skilled specialists. Today's solutions can be accessed and used by marketers and other business users to answer complex inquiries. Improvements include:
• Collapsing of product silos and ability to process increased data sources
• Increased number of specialized vendor solutions and expanded talent
• Cloud-based solutions

For readers interested in an excellent understanding of big data, data analytics, predictive modeling options, and the data analytics process, I suggest purchasing the Celent report here.

Maximize Bank Marketing Results With CRM Retargeting

From the beginning of a relationship, banks and credit unions capture and store customer data within a CRM database. This data is often enhanced with transaction history, purchase behavior and contact history and used as the foundation for building models to better target communication through direct mail and email marketing.

But what if you could leverage your offline CRM database for digital marketing campaigns as well, transforming your data into anonymized online segments through a process called data onboarding? These segments would then receive messages as a follow-up to your direct mail and email campaigns, improving all direct marketing results.

In the whitepaper, "Data Onboarding: The Key to a Successful Marketing Kingdom," Epsilon and LiveRamp discuss the benefits of integrating offline CRM data with online digital marketing. "Using CRM data to market effectively across channels is essential for marketers who want to reach their target audience multiple times with engaging, relevant and consistent messaging," says Auren Hoffman, CEO of LiveRamp.

What is CRM Retargeting?

Unlike regular retargeting (covered in Bank Marketing Strategy last October), CRM retargeting uses your internal offline customer and/or prospect database to reach individuals and households online, not just after they visit your website. By 'onboarding' your offline data, you can reach your customer and/or prospect segments with highly targeted display ads appropriate to their purchase history and interests.

CRM retargeting provider ReTargeter founder and CEO Arjun Dev Arora says, “With CRM Retargeting, marketers can seamlessly integrate display ads with their existing email and direct mail initiatives to create effective cross-channel campaigns with ease.”

Simply put, it's the marriage of the precision of using direct mail or email combined with the rich content and context of display - bridging the worlds of offline and online marketing for more successful customer communication. Since not every customer visits your website regularly (if at all), CRM retargeting is a great way to re-engage these customers and welcome them to key areas of your site.