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Data analytics accelerates disruption in banking


November.24.2014 0 Comments

analiticsAccess to data and the ability to effectively manage data analytics will decide which financial institutions prosper and which will be supplanted during this wave of transformation – this was one of the key conclusions taken from a recent report titled ‘Analyse This, Predict That’, which explores the financial services sector’s data analytics capabilities, and how players may use data analytics to win in a competitive growth environment.

It became clear to me, working with the data, that organisations that use analytics

extensively and systematically are rapidly out-thinking and out-executing their competitors. However, in what has historically been a very traditional business sector, the successful harnessing of the power of data analytics will require a new consumer engagement model – one that ensures that analytics enhance value whilst also reinforcing the trust that consumers place in their financial institutions – writes Rocky Scopelitti – Group General Manager – Industry Centre of Excellence, Telstra Global Enterprise Services.

But how ready are our financial institutions to compete with data analytics? The research suggests, not very.

The research studied 43 financial institutions across the Asia Pacific region, with results showing only 32% are on the verge of, or ready to compete. A further 17% identified their CEO and leadership team as having no commitment to data analytics.

Undoubtedly the way we interact with financial institutions has, and continues to drastically change and these new technologies create a step change for financial service institutions to deliver the highly personalised analytics-driven experiences that customers now expect.

Encouragingly, the research identified that analytics-enabled financial services, and the experiences these capabilities provide, have the ability to alter the perceptions of consumers, as well as to support strategies to acquire, engage or retain customers – whether executed through a branch, contact centre or digital consumer channel.

Three such analytics-driven customer experiences highlight how embracing an analytics-driven approach can help channels to evolve:

Me: Combines and extends the vision of a personalised contact centre and intelligent personal assistant, blending an intelligent personalised virtual financial assistant with a physical (but remote) relationship manager through an engaging and consistent interface.

Me: Turns the branch into an environment for identifying visitors and understanding their intent and engagement preferences so that branch staff (and even branch infrastructure) can deliver personally optimised content and interactions.

Me: Shows how providers can combine analysis of saving, spending, borrowing and investing behaviours with social analytics and broader market analytics to create online and mobile tools that help customers more effectively manage and use financial services.

The potential of data analytics to change consumer perceptions was clearly indicated via the consumer study, conducted at the same time, across Australia, Singapore, Malaysia, Indonesia and Hong Kong where respondents were asked to evaluate a series of analytics-enabled service concepts:

  • Personalised in branch experience
  • Personalised contact centre/telephone experience
  • Personalised digital banking experience
  • Digital Advice
  • Insurance customised to behaviour and lifestyle

The results clearly demonstrated the value of a personalised digital banking experience (e.g. tools, insights, alerts, recommendations, notifications on saving, spending, borrowing or investing) across the Asia Pacific region, with this concept ranked in the top two most appealing in all Asian markets. Demand for personalisation extends to the branch, with the personalised in-branch experience (e.g. recent interactions, history, context) also ranked in the top three concepts.

Across all five concepts, consumers indicated that ‘Knows me and my financial situation, irrespective of how I use the bank or financial institution’ and ‘Access to banking experts when I need them through my preferred way to interact with them’ experiences achieved strong positive results.

When it comes to maximising appeal, interestingly, in all countries, the personalised in-branch experience concept appears in the top three concepts. This finding may contradict the suggestion by some commentators that the in-branch experience is dying and will eventually be replaced by the online mode. Instead, it suggests that with personalisation, it can remain a fundamental part of what makes a financial services provider appealing to consumers in the Asia Pacific region.

But how do financial institutions position themselves for success when it comes to using data analytics?

An infograph on data analytics

The report identified that the power of the cloud connected by high-bandwidth, low-latency networks, makes the infrastructure and expertise required to harness advanced analytics, much more accessible. This enables financial service institutions (both traditional providers and disruptive new entrants) to deliver the highly personalised, highly contextual, analytics-driven experiences customers now expect.

By doing so, they will also be able to exploit their existing advantages over the newer entrants: namely, their unique position of trust, strong customer relationships with Gen X and Y and multiple touch points.

This report has demonstrated that the financial services industry has entered a new era where the pace, intensity and impact of change in how information is used to service customers can easily outstrip the capability of incumbents, creating a gap that is being exploited by new entrants.

This vision of truly analytics-driven customer service is underpinned by secure and highly scalable interconnected storage of customer data, which is connected to a wide range of specialised analytics services. What is for certain is that analytics-enabled financial services and experiences have the capacity to radically alter consumer perceptions across the Asia Pacific region and to support customer acquisition and in a way that respects customer privacy, enhances trust, and delivers greater value to consumers.