Data & Loyalty Strategies

„Smart“ usage of consumer data in the financial industry

Along with the increasing digitalisation there is a growing amount of data available. Whilst new market players already benefit from relevant data as a “means to profit-end”, financial institutions still have difficulty to use this valuable “resource”.

In the past, the exploitation of customer data and information primarily focused on risk management (data on credit ranking and risk). Meanwhile, this data is called upon already for the development of new products and the implementation of marketing and sales activities (especially socio-demographic data).

However, a genuine „360° view“ on the customer is generally still not happening. Data which provides insight on the consumer behaviour of the customer is only rarely being used by financial service providers although this data would enable them to analyse data from payment transactions and evaluate the customer’s behavioural patterns.

This is one of the main reasons why the digital majors such as Google, Apple or Ebay expand their product range with payment solutions. They are looking for something which banks already have: access to transaction data to enrich their available data and utilise this for customised communication and the creation of new products and offers. All this is primarily aiming at improving the customer relationship.

What exactly can the bank do now? On the one hand, there is the valuable “resource” in form of data along with the continuously growing demand of the customer for tailor-made products and personal communication. On the other hand, there is the trust which banks have worked very hard to build up and which they do not want to abuse by misuse of customer data.

The answer is: create relevance! Even the internal use of data provides enormous potential for product sales – not only in the context of cross-selling (key words “next best product” or “customer life cycle”) or customer loyalty. Moreso, it is possible to utilise the new insights into customer behaviour (on segment level) for merchant co-operations, as long as the bank stays the gate-keeper and keeps the exclusive access to any customer information (e.g. the provision of special offers as part of an online banking “market place”).

The use of the entire range of data will have considerable influence on the profitability of the business models of financial institutions. A “smart” and at the same time profitable use of data, especially data with insight into customer behaviour, will be the crucial component of the corporate strategy for financial institutions in today’s digital environment.

Talk to us about suitable „use cases“ and possibilities for your institute!

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