The increased use of digital channels is changing the reality of banking. Delivering an excellent customer experience on digital channels is becoming increasingly important, both from a service and a product sales perspective. Data and analytics are key to delivering more targeted marketing and improved services in this environment. However, many banks still need to invest in a number of areas to achieve the data management, processing, and analytics capabilities needed for enhanced digital service delivery.
Growth in the use of digital channels is changing the reality of banking at a rate few predicted. This reduces costs, but also endangers banks' sales, which are still often dependent on face-to-face interaction within branches. There is a need for banks to develop their digital channels' sales-generation capabilities; only a few banks deliver marketing through their mobile banking channels, and online banking platforms also tend to deliver static and relatively untargeted marketing messages. On top of this, competition for customers has intensified, with new entrants looking to bite into banks' profits, and customer expectations continue to rise as a result of the experience provided by companies such as Apple.
So that banks can grow their sales through digital channels, the focus should turn to optimizing customer journeys and delivering more targeted marketing. With the help of analytics and marketing technology, messages can be targeted to respond to specific needs and delivered on the preferred channel at the right time. The customer information banks already hold across their systems, and from channel interactions, is central to this. This is to some extent already a reality for Amazon, for instance, which creates content on its site that is specific to each customer, and pushes out customized offers and recommendations.
Banks are increasingly interested in investing in the use of data to drive decision-making and process enhancement, but using it to better understand customers remains a gap. In Ovum's ICT Enterprise Insights survey of 500 retail banks, 57% of the surveyed CIOs responded that exploiting information for business insight is among the top-three important trends in their organization for 2015. However, not much of the desire to be more data driven is directed toward customer-related analytics; nearly 36% of the surveyed banking institutions do not even have established plans for using analytics in this area.
Legacy IT remains one of the main barriers to making investments in marketing and customer-related projects. Fragmented data complicates matters considerably, making it difficult to achieve a real-time (or near real-time) proposition. Achieving true next-generation customer experiences requires investment in renewing the core systems underpinning them.
Retail Banking IT Priorities for 2015 and Spending Forecasts to 2019, IT0003-000649 (May 2015)
Noora Haapajärvi, Associate Analyst, Financial Services Technology
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