Turn the ‘Department of No’ into the ‘Department of Know’
By Andy Schmidt, VP and Global Industry Lead–Banking at CGI
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Executive Summary
- Traditionally bank marketing and compliance department spend a lot of time butting heads. What if they cooperated with each other?
- Compliance functions, through ongoing regulatory monitoring, often have insights that marketing and sales operations would value. They hold the keys to both customer data and behavioral data.
- Partnering with compliance can yield insights that will increase results — which helps everyone.
In banking, understanding customer behavior is crucial for success.
Institutions need the ability to use data to determine if they are offering customers what they want and selling offerings the way customers want to buy. They also need to identify the risk of attrition if their clients are less than satisfied.
Innovations like AI and modern datasets can help banks and credit unions elevate the customer experience. However, they still find it very difficult to extract this valuable data from legacy systems. Another challenge: Locating trusted data that can be used to build customer profiles. Creating a customer profile from multiple, disconnected, legacy systems can be time-consuming and inefficient.
If only there were a part of the bank that had clean, current data, arranged at the customer level, that knew how customers act now and can predict how these same customers will act in the future.
Actually, such a function does exist: the compliance department.
Understanding Key Types of Banking Data
There is an important distinction between customer data and behavioral data.
• Customer data encompasses everything a bank knows about its customers at a macro level, including — but not limited to — age, income, location and life stage. This data helps banks understand who their customers are and what they might need in general. This enables the institution to place customers into peer groups or cohorts. This data changes infrequently.
• Behavioral data differs from customer data in that it focuses on the specific actions of these customers, actions that distinguish customers both from and within their peer groups. For example, knowing how they access their bank account information — via mobile, on Sundays, after 5 p.m.
The combination of customer data and behavioral data allows banks and credit unions to understand why different segments act differently and enables them to tailor their offerings accordingly.
Read more: How Associated Bank Uses Data Analytics to Speed New Products and Drive Growth
Compliance Is Sitting on a Wealth of Customer Data
Whether they focus on Know Your Customer (KYC), anti-money laundering, or fraud prevention, bank compliance teams are the watchmen of the organization, tasked with observing client behaviors and identifying when behaviors change or no longer fit expected or observed patterns and activities. They are also responsible for determining if a customer’s risk profile has changed.
In some situations, such behavioral change suggests that a financial crime has been committed. In others, it indicates the opportunity to cross-sell or upsell.
Only your compliance team knows which is which. They would be happy to tell you if you would only ask.
Turning ‘No’ into ‘Know’
Compliance teams continuously monitor customer behavior for anomalies and screen customers against watchlists to protect both the client and the bank.
They can also prevent the institution from taking a specific course of action or offering a specific kind of product because of the perceived risk involved. This has earned them the nickname “The Department of No.”
This moniker makes compliance and compliance-related tasks appear to be a cost center preventing the business from reaching its growth potential. But maybe it’s time for all parties to revisit the relationship.
Consider that compliance teams have some of the cleanest and most comprehensive datasets in the bank, covering all types of transactions across the bank’s entire suite of offerings.
This makes the nickname “The Department of Know” far more appropriate.
By leveraging this data, banks can make offerings much more personalized, relevant and attractive to their customers.
However, privacy concerns vary by region, with stricter regulations in places like the European Union, meaning banks need to balance personalization with privacy regulations to avoid fines.
Read more:
Collaboration is Key to Unlocking Solid Data
Sales and marketing teams can collaborate with compliance teams to refine target markets and improve ROI when leveraging data.
For example, compliance teams can provide insights into customer behaviors and patterns across multiple products that can inform marketing strategies. Marketing teams can build on information from sales teams, which in turn can be used as a part of the picture for compliance teams.
Regular communication and collaboration between compliance and marketing teams can help banks leverage the full potential of their customer data, avoid fines, and create the best outcome for customers.
When marketing and compliance teams build strong partnerships, they can unlock the full potential of compliance data —transforming it into meaningful insights that enhance marketing strategies while maintaining regulatory integrity.
Four Steps to Turning ‘No’ into ‘Know’
How can institutions ensure alignment between compliance and marketing teams? Here’s how to begin:
1. Reach out to compliance partners to discuss target markets and behaviors.
The marketing teams that influence the customer base and the compliance teams that relay its sentiment are two sides of the same coin — and should be treated as such.
Marketing teams can’t drive sales or promote company services if they’re looking in the wrong place or promoting the wrong thing. It begins with constant communication and a better understanding of customer behavior, a challenging feat if they are isolated from their compliance partners.
2. Share data and insights to refine marketing campaigns.
Beyond simply communicating with marketing teams on a regular basis, compliance teams can directly contribute to campaigns that promote an organization’s goals, objectives and ideals. Customer data supplied by compliance teams should not just be part of the equation — it forms the basis for the entire formula for success. It can be the foundation on which marketing campaigns are built.
3. Enlist business intelligence teams to create marketing insights from compliance efforts.
Compliance teams traditionally focus on identifying anomalies and enforcing controls. Business intelligence teams bring valuable analytical expertise that enhances understanding of market trends, segmentation, campaign performance and customer journeys.
By serving as a bridge between marketing and compliance, business intelligence teams help ensure alignment and clarity across functions, unlocking deeper insights and driving more informed decisions.
4. Capitalize on compliance data to identify cross-product opportunities and retain customers.
Personalization is where the true potential of compliance data lies and the variable that keeps existing customers coming back.
Monitoring the behavior of an existing customer to ensure regulatory compliance can seem preventative at face value. However, it can unlock countless possibilities for organizations to improve the customer experience by constantly being in the loop, ensuring compliance and growth simultaneously.
