How Big Data Helps Banks Personalize Customer Service

By Likhit Wagle, Global Industry Leader, Banking and Financial Markets, IBM

Although 80 percent of CEOs believe they offer customers superior service, only 8 percent of their customers agree.

Banks and financial services firms cannot afford to have such a discrepancy. With today’s hyper competition, market volatility, and scramble to return to pre-recession profit margins, the financial sector has to squeeze the most out of every advantage it has on hand.

This is where big data and analytics come in. What the financial sector has more than any other industry is information. Every transaction is a nugget of data which, if pulled together and analyzed, can reveal unmatched insights into customers’ needs.

Leading-edge companies understand the great competitive advantage this data represents. They understand that sifting through transactions, real-time market feeds, customer service records, location data, and social media posts could mean the difference between customer loyalty and customers leaving. By making the most of all these data points, these smarter organizations are providing new personalized business models and services, rethinking how they enter and expand into new markets, and getting a jump on the competition.

While financial institutions have talked about “relationship banking” for years, too many continue to offer across-the-board pricing, or treat customers the same regardless of who they are, how long they’ve been with the bank, or how many accounts they have with an institution.

Smart banks are using big data to act differently, to create a 360-degree view of each customer based on how each and every one individually uses mobile or online banking, ATMs, branch banking or other channels. Instead of remaining product centric or segment centric, these firms are becoming truly customer centric for the first time.

Consider how Mexico’s Banorte is mapping out a new model of banking, or one that brings together client insights and interactions with advanced technologies to put the focus solidly on its more than 13 million banking clients and increase loyalty, cut costs, and boost profitability. Using big data and analytics innovations along with marketing automation, Banorte is working with us to create more personalized interactions

Before Banorte became one of the largest banks in Mexico, its employees knew each of their clients personally. But as the bank grew, it became more difficult to understand its customers as individuals. Using data analytics allows Banorte to gain insights into the banking behaviors of specific customers. The bank redesigned its systems so that now its employees can tap into information that lets them know which products best suit the individual needs of each customer, creating an experience that feels personal again.

At the same time, the bank is aiming to improve cost/income, reducing the ratio below 45 percent. Doing that requires more than just simply rolling out technology. It means rethinking basic processes throughout the entire organization, re-imagining how the bank functions, how employees interact with each other on strategic projects, and how they respond to customers.

Better customer service -- and loyalty -- starts and ends with a better understanding of what customers need now and anticipation of what they’ll need tomorrow. The age of treating customers as segments is over for good. To win and keep clients, you have to know and cater to them as the individuals that they are.