5 Ways Banks & Credit Unions Can Strengthen Their Data Capabilities

For many community financial institutions, use of data analytics to improve customer experience remains uncharted territory. Five fundamentals will help them bring their data capabilities up to competitive standards.

The prevalence of digital channels has given financial institutions increased access to banking data that can be used to attract and retain customers. That’s a plus, but CSI’s 2021 Banking Priorities Survey found that even while many banks and credit unions consider efficient use of customer data to be a top strategic priority, most rate themselves average or poor at actually using big data today.

In fact, for many banks and credit unions, using data analytics to enhance the customer experience remains uncharted territory. This must change, however. For institutions to remain viable in a far more competitive banking market they must be able to effectively use data to improve customer acquisition and retention. It’s the only path to creating a true consumer-centric banking experience.

So, how can banks and credit unions better leverage their data to meet the evolving needs of their customers? Let’s explore the fundamental steps leading to an enhanced customer experience.

Step 1: Connect the Dots With Data

When it comes to data, the phrase “a picture is worth a thousand words” could not be truer. Unfortunately, many financial institutions view data disparately between departments, and this segmentation only tells a fraction of the customer story. However, the value of an institution’s data is immediately maximized by connecting data from each department to view the whole picture.

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Putting data to use is a complex task, but part of the solution is simple. Every bank and credit union should appoint a data expert.

A data expert should understand your institution’s entire data set and use analytics tools to provide a complete picture of the customer journey. While department heads will rely on this professional’s expertise, a bank’s data will always extend beyond any one person. A successful data strategy, therefore, should include nearly every department within a financial institution in order to provide valuable feedback that helps shape the institution’s strategic vision.

Step 2: Assess Your Institution’s Data Segmentation

There are two main segmentation categories to focus on: transactional data and behavioral data.

Without a doubt, transactional data is the largest set of intelligence at any financial institution’s disposal. It includes loan balances, the customer information file (CIF), account balances and other information that revolves around banking operations. This data increasingly is captured by digital channels including mobile banking apps, digital loan applications and ATMs, as well as through in-person transactions.

On the other hand, behavioral data is non-transactional and includes insight into your customers’ spending habits, needs and wants. This data includes anecdotal experiences and touch points within an institution. Behavioral data is captured through a bank’s customer relationship management (CRM) platform or third-party integrations.

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Step 3: Understand How Your Institution Captures Data

Simply outlining data sources is only half the battle. Financial institutions striving to improve their use of data need to implement the right tools in the right channels to take full advantage of the information they have.

Let’s delve into the main channels a financial institution should employ to capture customer data.

Core system data
It’s no secret that almost all transactional data is captured and recorded within an institution’s core banking system. These systems are home to an abundance of customer data, from account balances to transaction history.

Digital banking data
Digital banking data has become a key piece of intelligence that your institution should capture. Even before the pandemic, eight out of ten consumer were using mobile banking at least once a week, according to Business Insider, meaning a large portion of your customers’ touchpoints will remain unknown if you’re not analyzing this data from a qualitative and quantitative point of view. Furthermore, your institution’s digital banking data should sync and integrate with its core data.

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CRM Data
Data from a customer relationship management system differs from other sets because it is considered non-transactional. CRM data provides insights into a financial institution’s existing customers, and can be leveraged to enhance the customer experience. This type of behavioral data has proven to be valuable in campaign management as well as with other marketing efforts to increase cross-selling opportunities.

Financial institutions can easily update products and offerings based on the current needs of customers with the information gained from this data. Ideally, institutions should be able to view all CRM data within their core system in real time.

Non-Core Data
A bank’s relationship with its customers extends far beyond basic banking transactions. Non-core data provides details on wealth management, investments and insurance — some or much of which may be outside the institution. Such data is an important component to gaining a complete picture of a customer’s banking relationship.

Analytics Dashboards
All of the above channels capture quantities of data. Banking analytics dashboards enable a financial institution to study the data in a more productive way. These dashboards, especially if they can be custom tailored, allow institutions to consolidate data from the entire organization into a single view.

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Step 4: Maximize Customer Data

A financial institution’s data capture, integration and usage is vital to success. When all three are prioritized, an institution can successfully leverage data to increase its bottom line and enhance the customer experience. This is particularly effective in two ways:

Taking full advantage of in-person banking
Despite the major shift to digital channels in banking, many consumers still prefer to have interactions with bank staff at times, especially when completing more complex banking tasks. Transactional and behavioral data provide trained banking staff with a deep understanding of the customers’ needs, enabling the staff to make personalized recommendations that increase customer loyalty.

Cross-selling and automated marketing campaigns
With a holistic view of customer data, financial institutions can identify customers with specific needs and cross-sell with the most relevant and personalized offers. Institutions can build upon this step by creating detailed customer journey mapping for maximum profitability.

Customer journey mapping provides insight on pain points for customers, such as an ineffective landing page, the inability to complete an activity online or long wait times in the call center. With access to this information, banks and credit unions can remove friction from certain processes, ultimately creating a seamless customer experience.

Step 5: Safeguard Data

As your use of customer data grows, so does the risk associated with data security and privacy. While customers know of some of these risks, it is still important to protect their personal information at all costs. Financial institutions should strive to be good stewards of customer data, from a business and ethical standpoint, by focusing on:

  • Efficient disaster-recovery capabilities.
  • Current cyber threats and how to defend against them.
  • Compliance with regulations like GDPR, CCPA or other data privacy laws.
  • Vendor due diligence, ensuring that all third-party vendors understand data privacy and have necessary protection plans in place.

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