Bank battle for innovation and market share needs huge live data crunching
When there isn’t much else to choose between brands, customer service becomes an important differentiation, and in financial services the situation has become acute. As regulators continue to make it easier for customers to switch providers, financial institutions must spend as much time keeping existing account holders happy as they do wooing new ones. Issuing apps and making it easier for customers to bank and source products online is a good start, but account holders will soon notice and defect if such moves are really a thinly disguised attempt to reduce costs and close branches.
A new EY report has found that nearly two-thirds of consumers perceive little or no differentiation of products and services across the overall banking sector. The last major technical innovation in banking was the ATM after all. Bain has demonstrated a clear correlation between a bank’s Net Promoter Score (the willingness of customers to recommend a company’s products or services to others) and how customers rank simple things such as the ease of bill-paying. By improving routine interactions, the average bank could increase its score by 10 to 15 percentage points, Bain says.
Institutions are well aware of this: it is no coincidence that removing friction from the customer journey has been identified as the most significant trend by financial service providers globally. Improved use of data and advanced analytics ranked similarly highly, suggesting the two are closely connected. Yet without advanced use of technology and data to support innovation, costs will soar as established players try to play catch-up with challenger banks.
A number of leading organizations, from Bank of America to Barclays Africa, are currently trialing artificial intelligence to improve the customer experience, by accelerating the resolution of queries and completion of tasks — with experts on hand to help with anything tricky. Beyond banking, insurance companies are embracing technology to simplify the claims process and offer lower premiums, as long as customers agree to connect their cars, boilers and home alarm systems so they can be monitored online.
Behind many of these service innovations is a wealth of data which needs to be managed and mined efficiently: hence the intense interest in big data analytics.
