Data-driven Banking

Banks have a competitive advantage when it comes to data because of the quantity and quality of the data they hold. Information like customer’s spending habits, mediums of investment, response to marketing campaigns, etc. make banks the custodians of a wealth of data. An understanding of what data sources to use can drive improved approaches to decision-making. Traditional banks need to respond by effectively integrating all of their services to become a modern 360° financial partner for their customers. The bank’s ability to predict customer needs, offer personalized financial products and services, mitigate risks, and comply with ever-expanding regulations will be key to its success. This cohesive strategy implements modern data architecture, which integrates large volumes of data from many sources.

Being digital bank does not happen overnight and does not happen by implementing one innovative solution. In order for a bank to be truly digital and ready for the future challenges, bank needs to have digital strategy with defined activities. Data-driven, high-quality experiences and insights to customers are the key for a bank to establish a relationship with customers and become their trusted advisor.

Artificial Intelligence (AI) is going to be of a great importance in banking and will enable banks to improve customer experiences. Through AI, banks can increase labor productivity and obtain competitive advantages. AI tools like ChatBots and Virtual Assistants already have wide application in improving customer experience, while Robotic Process Automation (RPA) has an important role in cost-cutting and improving efficiency. Main directions that banking needs are heading include:

• Real time decisioning
• Personalization
• Advanced predictive analytics
• Seamless customer experience through all channels

A bank that manages to react to customer needs in real time and offer the right products/services on the preferred channel will become the customer’s first choice when it comes to banking, and thus emerge as the market leader. Those that fail to embrace Artificial Intelligence (AI) and the benefits that come from unlocking data, on the other hand, risk being left behind by those that do. By observing and listening to customer needs, banks can maximize their retention rate, attract new customers, and accelerate into the digital future.

Role of Artificial Intelligence in Data-driven Banking

According to global research conducted in banking industry, applying artificial intelligence brings 40% increased labor productivity, while 47% of digitally mature companies already have defined AI strategy and 84% business think that AI will enable them to obtain competitive advantage.

AI initiatives in banking include all business segments: front-office, back-office and regulatory compliance. AI tools like Chatbots and Virtual Assistants already have wide application in improving customer experience, while Robotic Process Automation (RPA) has an important role in cost-cutting and improving efficiency.

ChatBots need to be trained to have complex, human-like conversations, and able be adapt to all languages. Main goal of ChatBot platforms is to become Personal Financial Advisor to the customer.

Next Generation Relationship Platforms need to continue where traditional CRMs leave off, going beyond simply managing information to automate customer journeys and to transform engagement across all channels. Innovative Real-time Decision Hub and user-friendly front-end are some of platform components that can take bank to the next level of productivity. CRM has to enable sales and marketing automation, lead management, and the optimization of processes, while increasing customer engagement. The unified platform enables banks to provide omnichannel experience to their customers and empowers building long lasting relationships with customers.

Customers now demand optimal usage of all channels and seamless experience across all channels. Due to the fact that customers expect to be targeted on the right channel, with the right product, CRM systems are crucial in banking industry. Thorough 360 customer view, predictive analytics and process automation, bank can provide full customer experience across all channels.

Steps to becoming Data-driven Bank

First step to being digital bank is to use all available data. The next step is to make data and results available to the customer. By doing this, bank provides added value, thus making them loyal customers and empowering cross-selling. By informing customer that his spendings are increasing, that he is spending more money on food than usually, bank is following customer-centric approach.

Financial institutions hold immense domain knowledge and platforms that they implement need to use that domain knowledge and expertise. For example, user stories on ChatBot platform need to enable flow changes in real time. When bank sends email campaign (outbound campaigns), reaction rate is only 0.8%. When customer asks ChatBot about certain product (inbound campaigns), conversion rate is 4/5. This proves that ways of approaching customers is drastically changing and financial institutions need to adapt to that.