Banks will need to focus on understanding changing consumer behaviors based on historic customer data to compete in a post Covid-19 world
While global economies including banks and businesses reevaluate business plans and strategies and remote work policies, they need to also refocus their understanding of their customers based on what the data says. The role of data and Artificial Intelligence (AI) in banking will be fundamental in a post Covid19 banking world to help banks strengthen customer relationships.
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According to an earlier March study by PYMNTS, banks reported an upto 70% increase in AI use from a year ago, this however brought the industry use up to only 10%.
The banking sector has not been as aggressive in its use of customer data and intent or predictive models to identify customer needs and changing trends. While other industries now rely on the capabilities of marketing and sales automation to drive revenue goals, banks haven’t joined this bandwagon in full force yet. Only a few global banks have mastered the art of using data and analytics to drive customer acquisition and revenue. Most of the time, banks rely on the insights their accumulated data provides but without the capabilities to detect those buying patterns or interest levels, they are still losing out on a fair market share by not being the first players to preempt a customer need and offer the right solution. At a time when fintechs, neobanks and digital banking solutions are changing how customers interact and manage their financial gains and needs, data and AI will be useful in helping banks stay in power.
But as the world adjusts to the changing demands of the new normal, banks will not only have to invest in better capabilities that drive digital processes and digital banking needs, they will also have to invest in better data to stay abreast of customer needs.
A few reasons how and why:
Social media profiling, Overall user behavior, Geolocation data
Without the right data tools, banks cannot dive into their customer’s internal profiling or social interests and overall user behavior. The advantage tech companies have over banks is their use of tools to target customers based on their interest and actual behavioral patterns. By using social media, networking and other online patterns, marketing and sales teams, equipped with the right tools can sell a product that will resonate with the customer the first time itself. Breaking down geolocation data to understand a customer’s daily activities can help banks push those products and services to the forefront that match their daily lifestyles. To offer a more enhanced customer experience, understanding the in-depth profiles of banking customers will be crucial to customer retention policies in a fintech world. Incorporating online purchase behaviors to existing banking history can enable banks to understand changing trends in consumer attitudes and pick new data points from which to assess needs and stay ahead in the game.
Using Internal data the right way
The good thing is that banks have access to a mass of historical customer data. Using their internal data to create models out of which analysts can then gain better perspective into deeper customer aspects like risk levels, financial sensitivities, repayment record can help forecast behavior or needs and help banks build those products or services that customers are now showing a need for.
Debit/Credit card data
Mining card data and use could help banks determine their customer’s actual spending habits, it will help understand the difference between their regular purchases, their lifestyle needs, how they choose to prioritize spending during a downtime. Tracking lifestyle changes and spend behaviors can in turn allow banks to know when a customer is more likely to want to know about new lending initiatives, for instance, it can also help signal what kind of account a family of four would need next, if for instance the eldest child is about to leave for college.
This is what led to an increased focus on open banking initiatives. The proliferation of APIs also allow more providers to offer products that serve financial requirements and needs.
Learning from large tech companies
Banks can actually take a cue or two to learn from what global tech leaders are doing to streamline financial management needs. Facebook’s announcement to launch a cyptocurrency and wallet, Apple’s introduction of a Goldman Sach’s backed credit card, Citigroup’s partnership with Google are just examples.
Yet, banks can use data to stay ahead in the marketplace and against evolving tech companies and their capabilities. Offering a holistic customer experience based on evolving changes in behavior and needs, identifying what motivates customers to buy financial services or products, spotting emerging trends will be key to standing ground in the competitive online banking and fintech marketplace.
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