How data-driven insights transform digital banking

Financial institutions are prioritizing personalization and innovation to attract and retain account holders in an increasingly competitive environment. However, according to a J.D. Power study, only 38% of U.S. consumers recall receiving personalized financial advice from their bank—and among these, only about half say it completely met their needs.

Why the disconnect? Today’s consumers increasingly rely on digital banking rather than branches. In fact, online and mobile banking is no longer a channel of convenience used to supplement branch visits. For many, it has become the only touchpoint with their financial institution.

As a result, banks and credit unions are finding it harder to understand and truly partner with their customers and members. The lack of personal interaction means institutions have lost a valuable feedback loop based on consistent face to-face interaction, during which a consultative relationship can be established and nurtured.

Relationships built over many years have been replaced with digital interactions that—while providing a comprehensive collection of features a given user may need—are far from personalized in a way that supports users through their unique financial journey.

Finding a better way to connect with users

The opportunity is clear. Financial institutions that can tailor the digital banking experience despite minimal in-person interaction will set themselves apart. Building a consultative relationship with consumers, one that supports their financial literacy, savings goals and debt avoidance, for example, can shift the relationship from purely reactive and transactional to one that proactively addresses consumers’ needs. In turn, such a relationship fosters brand loyalty in a highly competitive climate.

The challenge for many financial institutions is that today’s digital banking solutions are often built primarily to support the performance of transactions, such as viewing an account balance, paying a bill or making a transfer. Meanwhile, other valuable products and services that could enhance a consumer’s financial journey are simply overlooked. Connecting consumers to those additional opportunities and delivering the right service and support at the right time can shift the relationship from one that is purely transactional to one where the financial institution is viewed as a value-added service provider and, ultimately, a trusted partner.

Banks and credit unions have a wealth of available data about their account holders that can be used to better understand their current activities and potential needs, such as information about financial relationships, third-party transactions, loans, credit cards, mortgage payments, investments and savings.

The best digital banking solutions employ an architecture designed to interact with users proactively rather than reactively, using insights gleaned from this data. By leveraging information about users’ banking habits, institutions gain important insights that help them connect more easily with their users. For example, institutions might notify account holders about products that can deliver higher returns on existing investments, flag fraudulent activity or alert users that they are at risk of incurring overdraft charges.

Moving from proactive to actionable

It’s an accomplishment to adapt a digital banking system to be proactive rather than reactive, and it should pay dividends in customer or member satisfaction. But to fully evolve digital banking, financial institutions must empower users to take action based on the data. And because data analysis is often separated from data actionability, this critical piece is sometimes overlooked.

Consider the following examples where a consumer banking solution can not only proactively engage with users but then go a step further to blend personalization with convenience—an approach that is likely to result in far greater customer or member stickiness.

• Facilitating account opening: Institutions can be proactive by informing consumers about available products that provide higher returns on existing deposits. They can make it actionable by following up with a link to a customized digital account application that allows consumers to set up this new account immediately.
• Providing overdraft protection: Institutions can be proactive by alerting consumers that they are about to incur overdraft charges. They can make it actionable by enabling consumers to move the required funds from savings to checking by simply responding to the message.
• Building savings: Institutions can be proactive by coaching consumers to establish savings goals. They can make it actionable by presenting a savings transfer template to consumers that they can simply activate.
• Streamlining fraud detection: If potentially fraudulent activity is suspected, institutions can be proactive by contacting consumers via email or text to confirm whether the transactions are valid. They can make it actionable by enabling consumers to easily freeze their card by responding to the message.

Understanding the end game

Many financial institutions fall short when it comes to comprehensively supporting consumers’ financial goals and objectives. Despite limited in-person interaction in today’s digital-first world, banks and credit unions have an opportunity to move beyond a reactive, transactional relationship to one that more holistically supports a consumer’s financial journey.

With modern data intelligence tools, financial institutions can transform their digital banking platforms to interact more proactively with their users and deliver actionable insights.

The result? Consumers will shift from transactional digital banking users to loyal brand advocates, viewing their financial institution as a valued partner who helps them take steps to truly enhance their financial lives.

Ajay John is product manager, data intelligence at Apiture.

We offer actionable insights on other data and analytics topics that can benefit financial institutions in the BAI Executive Report, “The insights of data and analytics.”