“Big Data” is more than just the trend du jour. Banks that are leveraging the power of big data (data analytics) are gaining valuable insights on their customers and are making more informed business decisions. But, as I attend industry conferences and speak with bank executives, the million dollar question I hear is: How can a bank make data analytics produce results?
The reality is, a big data strategy means very little without an action plan in place to help the bank take data insights to the next level—tracking and managing the actions taken by not only your sales and marketing team, but by your customers. When big data becomes small and actionable, the results are increased efficiency and profitability at every level of the bank.
Uncover new opportunities
To understand how data can drive revenue, it’s important to understand big data’s value to the banking industry. Big data refers to the mountains of data collected at the bank in extreme velocities and varieties from various sources. If your bank has the proper advanced analytics technology in place, these newfound analytical insights offer a marked transformation to your bank— from more granular targeted marketing campaigns, to better cross-selling and up-selling based on customer needs and history.
Taking action starts with having clean, segmented data that provides the bank with a complete view of your customers, loans, deposits and profit performance, identifies opportunities for new business, and prescribes new actions for groups of customers.
Peter Drucker’s famous quote, “What gets measured, gets managed,” summarizes it best. To make your big data strategy pay-off and create business value, it needs to include these key steps:
- Formulate a Plan: Make a plan for collecting and organizing data and a way to measure how data analytics can create long-term value. Effectively capturing, collecting and slicing through hidden opportunities will give your bank a competitive edge.
- Assign Action: Establish a documented system visible bank-wide that allows you to segment, manage, formulate and track specific prescriptive actions that will enhance your marketing ROI and boost revenue.
- Apply Action: Develop effective marketing and lead generation campaigns that are targeted to the right customer with the right message at the right time. Compare the performance of different actions against a control group.
- Assess and Refine: Measure your actions to determine which marketing campaigns and segmented audiences generate the greatest response. Once key data segments are identified, you can then take additional action and focus your efforts on the most promising opportunities.
Consider this scenario:
Three months ago, a customer opened a checking account with Bank A. Through data analytics, Bank A discovers this customer writes checks for two different loans held at two different banks. By applying action to data analytics, a targeted campaign can be created for customers in this same scenario offering incentives, special pricing and flexible terms to transfer their loans to Bank A.
Having a system that tracks opportunities and outcomes will provide you with insight on the most effective messages, targets and timing. Furthermore, analyzing the success rates of targeted marketing campaigns and the factors that led to sales opportunities will help sales and marketing managers devise more effective marketing strategies that deliver results.
The biggest hurdle bankers will face in 2015 is driving growth and profitability. Big data is undoubtedly the starting point to boost your competitive advantage. But transforming information into action-oriented data is what will help community banks grow profits.
Steven Simpson is senior vice president, financial institution solutions, at Saggezza. The company develops analytics products. He can be reached at [email protected].