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November 13, 2014

Banks Sit on Customer Data as Needs Go Unmet

George Leopold

The nation’s retail banks have a potentially bigger problem than complaints about fees and low interest rates on savings accounts: Despite sitting on a “gold mine” of data, a survey finds that financial institutions use little of this business intelligence to better understand their customers.

The inaction compounds a larger problem faced by banks, according to survey results released this week by enterprise data management specialist NGDATA. The survey found that nearly half of respondents rank customer service highest when dealing with their bank, but only 20 percent said their bank understands customer needs.

The way to close the customer service gap is for banks to leverage the “billions of existing data points on their customers that can help them better understand their customers’ needs,” the survey found. “Banks can achieve this by leveraging existing and historical customer data to target customers at the individual level and foster a more personalized experience.”

One potential data analytics application cited in the banking industry survey was the creation of daily alerts with data-driven notifications about customers who might be closing their account in the next 30 days.

“The key for banks to deliver superior customer experiences is to contextualize data, and to get personal—understand the customer at the individual level, and understand their lifestyle to deliver products, services and content that are pertinent to them, via the right channel, at the right time,” NGDATA CEO Luc Burgelman, said in a statement releasing the survey results.

“The research shows that customers want to be valued, and by effectively using existing customer data, banks have an opportunity to drive actionable results” to retain customers.

The survey recommends that banks use analytics tools to build up customer databases that can be leveraged where it matters: in branch banks. “If a customer is conducting business at the bank branch, it is critical that the bank has quick access to that customer’s individual profile,” including a transaction record, web site activity and financial history, “so they have the information they need to” improve customer service.

With more consumers switching to online banking to at least track account balances and often to pay bills, it was somewhat surprising that the survey ranked easy-to-use online services third on customers’ priority list after face-to-face customer service and bank location. Online banking was identified as the “top channel” used to conduct banking transactions. It is also the likely source of most customer data.

The retail banking industry faces an uphill battle when it comes to retaining customers, and it is not clear that big data is the solution. Nearly half of respondents said they are “not very loyal” to their banks while less than half of those surveyed had any expectations that banks would adjust their practices to meet customer needs and preferences.

The NGDATA-sponsored survey was conducted in October 2014 via Google and included 517 respondents.

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