Data Speaks Volumes, But Are Financial Marketers Listening?

The secret to any strong relationship is good listening skills, especially in banking. The deep troves of transaction data held by banks and credit unions contain countless small clues to suggesting what consumers need. But financial marketers that don't listen to the story their data tells risk putting people off. Used correctly, data-driven insights lead to much more than just a one-time cross-sell.

Great banking relationships are a lot like a healthy marriage. That may seem an odd statement to make, but these two types of relationships are more similar than you may think. For one thing, paying attention to subtle communication clues — often found in data — can reap big results if handled properly.

Many experts’ say that the key to a strong personal relationship is communication, while others narrow it down further to listening. Either way, for a financial institution, these are foundational elements of lifelong consumer relationships.

People often confuse communication with making direct conversation through talking, or even by texting, or sending an email. The most powerful statements, however, often are made indirectly through the unspoken, seemingly little things people subtly communicate. These little things include facial expression, emotion, a chuckle, a nervous habit, a change in behavior, or even silence.

Often such things really tell you what makes your partner happy, sad, mad, frustrated, content, or one of the other many emotions we all experience. Individually, these seemingly minor expressions appear to be just that, minor things. But collectively, they provide insight into a person’s needs, help you understand their actions, or even allow you to predict if something “big” might be about to happen.

Is your financial institution listening to the little things — both in person and in your data?

Every day, banks and credit unions have thousands (or even millions) of direct conversations with consumers in the branch, via email, call center, direct mail, and online chat systems. While these conversations give insights, on their own they won’t fully reveal what each consumer really wants or needs.

For example: people may reject an offer a branch teller presents because they are in a hurry, have to talk to their spouse, don’t feel knowledgeable about the product, or don’t really know what they want/need. Or, the customer-facing staff may not have asked the right questions or documented the full context of the conversation in the teller, CRM, or call-center platform.

Fortunately, consumers are also communicating millions or even billions of the “little things” through their card transactions, ACH and bill payments, product choices, and mobile and online banking interactions.

Collectively, through these transactions, consumers are telling you what they need. All you need to do is listen.

‘Small Data’ Can Point to Big Life Events

Let’s look at how one small transaction can help anticipate a big — and profitable — life event.

“Kevin” recently put a down payment on an engagement ring at a jewelry store. When purchasing the ring, he chose to finance it, which provided an opportunity to cross-sell Kevin a 0% interest credit card or similar product. But there is an even greater opportunity.

The average wedding in the U.S. costs $33,391. Today’s couples pay more of this cost than in the past. One survey found that 74% of couples plan to take out debt to cover wedding costs — 61% using credit cards, and 21% using a personal loan.

Kevin’s banking provider should have the ability to recognize that this one little transaction at a jewelry store is the precursor of a major life event, even if it doesn’t have Level 3 transaction data (the most detailed information).

Further, Kevin’s financial institution has the opportunity to advise him on how he can creatively pay for the wedding through a combination of savings, increasing cash flow through debt consolidation/refinancing, and/or leveraging his home equity. Guiding Kevin through this expensive and stressful time increases the likelihood of his bank or credit union becoming the primary financial institution for the soon-to-be married couple.

Helping consumers navigate a financially stressful event, like marriage, will leave a much greater and positive impression than simply trying to cross-sell or up-sell a product. Many times, this less-direct approach may not appear to have a quick and large payoff, but can result in a deeper relationship with an entire — and perhaps expanding — family versus just one individual.

Marrying ‘IQ’ With ‘EQ’

As most financial institutions now realize, they have a wealth of consumer data available. Most also know they face challenges in leveraging data to its full potential. One challenge is converting raw data into useful insights. A key factor there is being able to marry (pun intended) customer intelligence with emotional intelligence (EQ), to truly listen and develop meaningful insights.

A second challenge is extending the insights into action and delivering personalized, well-informed conversations, content, and offers. Using consumer insights to engage consumers in a positive, supportive fashion rather than sending people broad cross-sell messages is critical to building trusting, long-lasting relationships.

Helping consumers get through a financially stressful time — like getting married — will leave a much greater impression than simply trying to cross-sell a product.

Returning to Kevin, it is likely he didn’t even consider explicitly asking his banking provider for help. However, his transactions communicated that he will most likely need some financial guidance. A financial institution with mature “listening skills” recognizes that a large purchase at a jeweler is inconsistent with Kevin’s usual behavior, similar to how the fraud-alert systems in use by many banking companies flag questionable transactions.

How to Not Use Consumers’ Banking Data

There are many approaches banks and credit unions could use to successfully help consumers like Kevin. One we do not recommend is immediately reaching out with an email or display ad that congratulate the person and attempt to cross-sell them products.

While insight without action is useless. Insight combined with action that is creepy or awkward is even worse.

Additionally, one transaction isn’t usually sufficient to draw an accurate conclusion. Imagine the confusion or embarrassment if this purchase was not an engagement ring (or, even worse, if the intended says no!). A savvy financial institution that applies EQ with the data insight would help avoid that mistake by:

  • Monitoring for confirming transactions. A subsequent purchase with a photographer, banquet hall, or food caterer, for example, would reinforce that a substantial life event was under way.
  • Subtly serving consumers with content. Starting conversations that can make them aware their banking provider is there to help with big life events, without being explicit.

But how can you possibly listen to every consumer? Even if you have superbly trained and talented customer-facing staff (a point covered below), they only deal with a diminishing number of consumers. The answer in large measure is transaction analytics — tools that cleanse, tag, and categorize massive amounts of data at scale. This is the foundation for turning insight into action. The more accurately the data is tagged and indexed the more effective machine learning and artificial intelligence (AI) will be.

Three Reasons Not to Solely Rely on Branch Personnel

There is a prevailing belief that making customer insights available to customer-facing associates is good enough. But the fact is, relying on branch and call-center personnel isn’t enough. Here are three reasons why:

  1. Drive-thru transactions account for, on average 60-65% of branch transactions. These transactions don’t present real opportunities to engage with consumers, who are most likely running one errand out of many.
  2. Branch and call-center associates have to balance wait-times and throughput with taking the time to converse with consumers.
  3. Associates must have easy access to contextualized consumer intelligence data and quickly make a connection to a relevant product. They must instantly assess if consumers are interested, or sense that presenting them with an offer would simply annoy them and the other people in line.

Fulfilling all of the above, in the moment, with each consumer served is an extraordinary achievement. Relying on branches and call centers as your primary communication channels and staffing them with associates who, on average, make less than $14 per hour is aspirational at best.

Furthermore, in most cases these customer-facing associates don’t have access to all of the information they need to make a difference. And, if they don’t understand the little things, then they cannot solve the big problems that a consumer really needs help with. This is not to diminish the human element, but to emphasize that it must be enhanced with intelligent data.

Circling back to the marriage analogy, if communication isn’t strong, the relationship likely will end. Similarly, every financial institution needs to implement the same principals of good communication, especially listening for the “little things.” But each also has to take action — appropriate action — on what is heard.

Rob Heiser is the CEO and Co-founder of Segmint a financial data technology company. Brian Higgins, a former banker, is President and Founder of VX|R, a financial institution consultancy.

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