4 Data Analytics Tips Help Financial Institutions Match Consumer Needs

The economic situation is brightening, yet many consumers continue to struggle financially. Now is a pivotal time for banks and credit unions to be proactive with personalized messaging and offers to assist this large segment. The same efforts will also prove useful in engaging more well-off consumers.

During the financial crisis in 2008, banks faced a serious existential threat, and consumers came to their rescue by funding a bailout. In 2020, the tables were turned as the pandemic placed immense financial stress on consumers, and it’s financial institutions’ turn to relieve the burden.

Even as the ongoing vaccination rollout brings hope that the end is within reach, there is no quick remedy for the financial hardship this pandemic has brought. A March 2021 consumer survey revealed that 43% still don’t have any emergency savings and that 62% are currently living paycheck to paycheck. Rebuilding from numbers like that will take the help of financial institutions across the country for some time.

Not only is this the right thing for financial institutions to do — it’s what consumers expect. More than four out of five consumers (84%) want brands to educate them on how their products and services can help them cope with pandemic-related life challenges, according to Edelman’s 2020 Trust Barometer survey. Financial institutions that reach out with relevant offerings and advice to help vulnerable customers will benefit from increased customer loyalty and trust.

But to reap these rewards, banks and credit unions must ensure their campaigns speak directly to consumers’ unique needs. They can’t just send the same messages or offers to everyone. A blanket approach might have been enough in the past for typical consumer banking products like checking accounts, mortgage offers, and credit cards, but the stakes are different right now. Many consumers aren’t sure of the right steps to get back on their feet and want to know that their financial institutions are dedicated to helping them get to a better spot quickly.

Data-Driven Personalization Will Make the Difference

Banking data holds the key to achieving this. With the right tools, financial marketers can analyze mountains of transactional and behavioral data, identify trends and transform those insights into relevant offers and services.

However, the banking industry has been notoriously slow to adopt data-driven customer engagement strategies, and it is time for that to change: As seen, a majority of consumers say they want banks to leverage their personal information to offer better services and deals.

It takes time, energy, and an investment in technology to truly understand your customers and their needs — but it is well worth the effort. With these steps, financial institutions can reach and help struggling customers, who will remember the help. In addition, the investment will improve engagement with those customers who are in stronger financial health.

Here are four suggestions to help bring that about.

1. Break down data silos to take action in real time.
Your financial institution already holds tons of consumer data, but how well you can use it depends at least in part on how well it’s organized. When data is siloed within one department and inaccessible to others, it can be impossible for the right people to get the information they need to form a full picture of your customers and their needs.

Practical suggestion: Focus on collating and organizing data, and develop quick and efficient systems so the data is continually refreshed to offer valuable insights. To aggregate data from disparate departments into a fuller view of each individual customer, you can export department data into a shared workspace that can be easily accessed across the organization. Automated technology — ranging from a secure customer relationship management system to a more robust customer engagement solution — is another option.

This data organization needs to take place quickly, to enable a real-time look at your customers’ changing needs and deeper insights into their financial health at any given moment.

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2. Use metrics to see changes over time.
Financial well-being is never a straight line, especially in the current economic climate. Customers will go in and out of financial stability and need different things from your institution at different times. Tracking certain data trends allows you to see consumers’ degrees of financial distress and success, so you can respond accordingly.

Practical suggestion: A bank or credit union could choose to study customers’ direct deposit activity throughout the pandemic. This could mean analyzing every account on a quarterly basis and grouping customers into three segments: 1. missed one of the past three monthly deposits, 2. missed two of the past three deposits, or 3. has not made a direct deposit in the past three months.

After creating these segments, the institution could then choose to engage with customers who have missed two or more direct deposits, perhaps by encouraging them to opt-in to overdraft protection or offering information about interest and fee relief options.

3. Drive traffic to digital.
The percentage of consumers regularly using a mobile banking app varies widely by source — from 39% in an ABA fall 2020 survey to 89% in an early 2021 survey by Insider Intelligence. Even if you simply split the difference it suggests there’s still a lot of upside growth. Now more than ever, banks and credit unions should be driving as much traffic as they can to their digital options. This will not only help overcome the lingering reluctance to conduct in-person banking, but it will also help institutions amass more consumer data and expand their digital reach.

Practical suggestion. Financial marketers should identify segments of consumers who rarely or never use digital banking and target them with messages that promote online adoption. People are often hesitant to use mobile apps because they come with a learning curve, so consider offering written or video instructions on how to navigate these tools.

( Read More: Banks, Credit Unions Better Buckle Up for These Big Data Trends )

4. Rethink marketing campaigns
As the economy and the life circumstances of your customers and prospects change, so too should your messaging. Evaluate your marketing materials against the insights you gain from customer data to ensure you’re not being insensitive to consumers’ current situations.

Practical suggestion. Offering incentives for spending is a common campaign focus for financial institutions. Many offer rewards for certain transactions, like increasing debit card point-of-sale purchases. For consumers still living paycheck to paycheck, however, advocating increased spending could be seen as “tone deaf.” Instead, focus campaigns and messaging around appropriate and timely initiatives, such as rewards that support local businesses or offers of savings bonuses.

Now is a pivotal time for banks and credit unions to be proactive, send personalized marketing messages, and show consumers they care. During difficult times, people not only remember who was there to help them, but also who was insensitive to their situation.

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