Gaining an edge with a preemptive data strategy

Community and regional financial institutions have often lagged behind other industries in their efforts to collect and use data. But even as they recognize the need to build a data strategy to attract and retain customers, they also face headwinds from big banks with greater development resources and from technology companies hoping to fill the data void.

They may not have the same resources as a large bank, but there are ways to optimize the power of the information at their disposal. In today’s competitive environment, it’s critical to determine how to leverage data to improve the customer experience with insights such as engagement analytics, spending patterns and benchmark comparisons with competitors.

Solutions currently exist that feature dashboards with plenty of data, yet these solutions fall short in terms of making data actionable or easily consumable. Offered by nonbank vendors, these solutions rely on financial institutions or digital-banking providers to source their data. This limits their insights to customer transaction data and demographics.

Digital-banking providers have access to more robust financial data points—such as payments data and information about customer interactions online and via mobile apps—than do data technology firms, enabling them to provide a more complete view of a customer’s financial data set.

As the market for data solutions matures, technology is moving beyond today’s dashboards and insight analysis to more robust data intelligence solutions with flexible, autonomous features. These features include:

• A portal to discover answers to important questions about everything from operations to customer experience, while also providing the guidance and tools needed to act on these insights.

• A platform with direct access to key data sets that allows institutions to connect custom data and build their own insights, dashboards and reports. This should not be a technical tool for developers but rather a visual tool that provides nontechnical individuals with a simple drag-and-drop interface.

• A marketplace that will allow institutions to extend the depth of data analysis by bringing in data from various sources, including other business or marketing tools, external data providers or simple downstream applications that use the data portal as a source.

• Access to event feeds that can help build advanced process automations. Essentially, this results in a feed of events originating from customer actions, changes in key metrics or market events that can be harnessed as a trigger in an automation flow.

• User-facing analytics solutions that can enhance a digital banking platform with personalized interfaces and intelligent, analytics-driven features to build a more intuitive experience for customers.

Typically, only the largest banks choose to create their own data solutions. Although smaller institutions gain autonomy with this approach, they take on additional tasks to cleanse and warehouse data, not to mention the need to build out dashboards and reporting tools. This proposal is both costly and resource intensive.

Another option is to partner with a third-party data technology provider, although few of today’s data technology companies offer insightful dashboards and analysis. While they can analyze transaction data and customer demographics to derive insights, their interfaces typically don’t allow a deeper dive into financial data. What’s more, these nonbank companies depend on a financial institution or fintech to source the data, which provides an incomplete customer picture.

Financial institutions can benefit from a solution that strikes a balance between these alternatives—partnering with a digital-banking provider that provides innovative back-end data technology as well as a robust set of financial data to feed insights. This approach offers the ability for community and regional institutions to create their own analysis and dashboards while delegating the data mining and maintenance.

A good data strategy will help banks recognize what customers want and allow them to act quickly on those insights. When committing to developing a data strategy, they can set themselves apart from competitors by delivering a personalized customer experience.

Ajay John is product manager, data intelligence at Apiture.

Learn how financial services organizations can use data to create strong relationships and enhance other business opportunities in the BAI Executive Report, “The power of data: How banks and credit unions can put it to work.”