Enhancing a Customer-Centric Strategy with Data

In today’s highly regulated, extremely competitive environment, a top priority of financial institutions is to offer customers the appropriate products with razor-sharp precision. If successful, a financial institution may realize increased account acquisition and usage, while achieving higher return on investment (ROI) through long-term customer retention.

For its October 2013 report, “U.S. Checking and Debit Card Account Trends: Big Banks Squeeze for Juice,” Aite Group surveyed 20 executives from financial institutions with assets of more than $10 billion to better understand and identify market trends and  opportunities in retail banking. The survey results showed that for the next two years:

• More than 60% see checking account acquisition as a top priority; and
• 75% recognize cross-selling credit cards as a key strategy.

There is a great deal of potential in acquisition, as more than half of respondents have seen an increase in checking account growth since 2011 and expect that growth to continue through 2016. In addition, the 2011 Durbin Amendment to the Dodd-Frank financial reform bill implemented interchange rate caps for debit cards. As a result, credit cards are now a more profitable offer for financial institutions, making that cross-sell an important strategy to master.

The Consumer Financial Protection Bureau (CFPB) fully expects financial institutions to execute a customer-centric approach and deliver a consistent customer experience across their organizations. Moreover, today’s consumers are also demanding a better experience. To better serve customer’s needs, financial institutions have quickly realized that having better data is paramount. The good news is that the data is out there to help financial institutions meet the CFPB’s new expectations of customer-centricity.

Understanding Your Customer at Acquisition

Customer on-boarding is a critical process where important decisions around risk and marketing must be made to precisely evaluate the customer’s potential as early as possible. Blanketing the market with generalized offers is no longer a viable option and banks must seek to increase the ROI to efficiently maximize household profitability.

By having a complete, comprehensive financial view of the customer from the very beginning, financial institutions can attract, grow and retain profitable households by making the right offer, at the right time, to the right customer.  There is a wide variety of data that helps to predict customer profitability and the likelihood of offer acceptance. Payment information in the telecommunication, utility and paid-television industries is available outside of the traditional credit file.  This information is rich and has grown dramatically over the past several years. With access to greater amounts of customer data, banks can capture a 360-degree view of the customer to better identify their unique needs and be more prescriptive at the point of sale.

Meeting Your Customer’s Needs for Life

Once you have a clearer financial picture of the customer, cross-selling can be made with confidence. Having the right customer data helps your institution to determine whether an offer is appropriate. Is the customer an investment referral? Does the customer own a small business? Does the customer qualify for a standard savings offer or is a money market account more relevant? The questions are endless, but the bank benefits from the confidence the data provides.

From a marketing standpoint, having more and better customer data delivers a better overall customer experience regardless of channel. Though the sophistication of banking at the branch, online and on a mobile device varies, financial institutions can leverage rich consumer asset databases that provide valuable insights to cross-sell with more success.

With a foundation of vital information, a bank can accurately assess the long-term trajectory of a customer and continue to provide products and services along their financial path. As the expectations for marketing ROI increases and budgets remain constricted, a data-driven marketing strategy significantly enhances customer-centricity and allows financial institutions to benefit from the higher level of service they are providing.

Brad Jones is Retail Banking Solutions Leader at Equifax, a credit reporting company.