Data Analytics

4 Things Banks Can Do Now to Build Customer Loyalty with Data

Banks must forge more human connections with customers or face extinction.

Olaf Tennhardt is managing director and experience services leader with Deloitte Consulting.

The world has changed radically over the past 12 months, and the world of finance is no exception. Banks, bank employees and banking consumers have all been rocked by the global pandemic. The result: an opportunity to transform the industry.

This transformation was already underway pre-pandemic, but COVID-19 has accelerated it. Long-standing analog behaviors have shifted to digital-first modes — and in some cases, digital-only ones. Consumer attitudes about brand, value and loyalty are rapidly evolving.

Of this I’m certain: In 2021, the defining disruptive force for financial services will be customer experience.

According to Gartner, 9 out of 10 chief marketing officers now expect to compete mostly on customer experience, and this may hold especially true for banks.

Given that 73 percent of respondents globally use online banking at least once a month, it stands to reason that standout consumer experiences are best delivered digitally. However, building a platform for seamless, omnichannel interactions isn’t enough. To win, banks will need to use that platform to do something more and create moments of real human connection.

Today’s customers expect interactions tailored to their needs and wants. What’s more, they should. The good news is the technology to make these connections possible at scale is now available. What’s more, this shift may no longer be optional.

Shake Up the Status Quo with Personalization

Even so, few banks have made progress in this area. In a 2020 Adobe/Ovum survey, 43 percent of established financial services brands say their greatest risk of disruption lies in their inability to respond quickly to market demands.

This is a dangerous place for banks. With the pandemic dragging on, Foresight Research predicts bank customer churn rates will double, with 38 percent of millennials and 27 percent of Gen Z customers in particular more likely to switch banks. Deloitte’s own consumer banking research shows that a significant percentage of bank customers would consider a banking product from a nontraditional company like Amazon.

So, how can banks build more human connections with their customers? They can use data.

Consumers already willingly share some of what’s happening in their lives when they interact with their banks: their buying habits, life events, plans and intentions. It’s all in the data. Unlocking this data is the key to delivering more meaningful experiences to customers and building real, trusting relationships. In fact, new research from Forrester and Deloitte shows that businesses across industries recognize the importance of customer information as it relates to customer experience and realize that they need to take ownership of that data.

How Banks Can Leverage Their Data

This can be a heavy lift for traditional banks. Their data is embedded in decades-old IT and organizational systems built to push products to customers. What’s the first step in unlocking that data? They must make a shift in mindset away from marketing products to consumers and toward creating value for them. With this maxim in mind, banks can deploy new technology to consolidate systems and establish formal data strategies and governance. Central to these changes is making data management a core competency.

A customer data platform can help banks access and orchestrate the customer journey in real time. Artificial intelligence and machine learning paired with sentiment platforms can collect and understand the data signals that identify moments that matter to people, then deliver them relevant, meaningful experiences. In other words, banks can meet their customers — whether it’s a restauranteur struggling to keep his business afloat, a couple rethinking their retirement strategy or a family selling their city condo and moving to the suburbs — where they are.

Where’s the best place to start? Here are four things banks can do right now to start creating human connections:

Establish an operating model that integrates business processes around customer experience. Banks must come together not around product lines but around the customer, connecting processes and technologies across the ecosystem to create seamless omnichannel experiences that customers can trust. This means shifting to an operating model that emphasizes customer collaboration and connection.
Own the data. Banks have long outsourced customer data interpretation and action. It’s time to bring more of that in-house. Data should be a core competency, owned and maintained in a bank’s cloud and behind its own firewall.
Automate decision-making. Banks can leverage AI and ML to identify the best way and time to engage with each customer, optimizing the experience and the outcome.
Connect new customer insights with omnichannel touchpoints. Insights provided by smart automations aren’t very useful unless put into action. Be sure they inform each customer touchpoint across the omnichannel spectrum: call center, website, online targeting, chat, email, direct mail and so on.

The writing on the wall couldn’t be clearer. To stay relevant, banks must transform the way they deliver customer experiences. Like any true transformation, these won’t be one-time changes. Instead, they represent the start of a new approach to banking altogether, where financial institutions connect with their customers through agile, effective real-time decision-making and make data-backed decisions in the moment.

Some won’t choose this path. However, those that do will deepen their customer relationships in ways that drive the connection, loyalty and growth now necessary to thrive in 2021 and beyond.

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