Data Analytics

American Banker Digital Banking Conference: Put Customers First in Data-Based Decisions

New technology is helping financial institutions leverage the vast quantities of data at their disposal, but how much is too much?

Bob Keaveney

Bob is the managing editor of BizTech magazine.

Banks and credit unions sit atop vast troves of data on their customers’ financial lives. On one level, that creates an unrivaled opportunity for institutions to build personalized experiences and marketing appeals aimed directly at individual consumers.

But what’s the most effective way of doing that? Can financial institutions harness data on individual customers in a way that’s scalable — and legal? At what point do banks risk annoying or even offending customers who think their institution is going too far in leveraging their data for business purposes? These questions are eternal for banks, but finding the right balance has become more urgent as artificial intelligence (AI)-powered data analytics tools and personalized marketing engines have made it easy to do far more with the data they have.

It was the subject of several panel sessions at the American Banker Digital Banking conference, taking place in Boca Raton, Fla. through June 4.

Click the banner below to explore financial solutions inspired by this American Banking conference.

BTQ225_AmericanBanker_Insider_CTA_700x120

BTQ225_AmericanBanker_Insider_CTA_300x250

How Banks Leverage Data To Help Customers

Regions Bank, which has more than 1,400 branches in 15 states in the South and Midwest, strives to leverage AI to personalize the customer experience in a number of ways, including in offers they make to customers, content they show customers online, and information they provide to commercial and small-business account associates, to “help them deepen those relationships” said Kristen Rankin, Regions’ executive vice president and head of digital. They also use it in the contact center, leveraging sentiment analysis to help associates manage calls more smoothly.

“If someone is having a problem and they’re frustrated, that’s probably not the best time to suggest a new product,” Rankin said.

Woodforest National Bank, which has about 750 branches in 17 states, uses personalization techniques to protect customers against financial fraud, according to Jason Schlitz, Woodforest’s senior product manager for digital channels. “The bad actors are trying to use AI faster than we are, so we have make sure that we keep up,” he said.

DIVE DEEPER: Read more in CDW's Artificial Intelligence Research Report.

And Fifth Third Bank , which has about 1,100 branches in 11 states, uses personalization techniques routinely to build new product offerings for customers. For example, it recently developed an “onboarding checklist” for all new account holders, designed to help them better understand their own financial wellness goals, according to Erin Crawford, the bank’s vice president of consumer digital for payments and money management. Fifth Third also uses personalization to help its collections department, providing associates with information on specific customers that “might help that customer get out of delinquency,” she said.

“Is there a settlement offer they’d qualify for? Because maybe that customer can’t be on a payment plan,” Crawford said.

In every case, though, banks should be striving to help customers first, not the bank, Schlitz said: “I’m actually trying to help the consumer do a better job on their financial wellness.”

If someone is having a problem and they’re frustrated, that’s probably not the best time to suggest a new product."

Kristen Rankin Executive Vice President and Head of Digital, Regions Bank

Why Customer-First Thinking Must Prevail With Banks

The idea of placing the customer’s interest, rather than the bank’s, at the center of all data-based decisions is the hallmark of an effective personalization program, said Rab Govil, CEO of Naehas, a provider of compliance automation solutions. He noted that the issue is not a new one and is not confined to banks. Many retail businesses, especially those with large online presences such as Walmart or Amazon, have deep insight into consumer spending patterns and leverage that insight with targeted recommendations. Customers have come to expect that from retailers to an extent, but that may not be the case with banks. And even retailers must guard against going too far, Govil said.

“Decades ago, I was meeting with a Lowes executive, and a marketing manager came into the room and said she had seen a person buying some lumber and also some nails and other items, and she figured out that that this person must building a deck,” he recalled. “She said, ‘I’m going to reach out to this person.’ I said, ‘Don’t do that.’”

Panelists said that financial institutions need guidelines for what they will and won’t do. They should start with applicable regulations, as certain categories of data that banks collect on customers may be protected from being used for certain marketing purposes. Using customers’ ZIP codes, for example, could be legally problematic.

Beyond the regulatory hurdles, banks should think carefully about whether their marketing offers make sense from the customer’s perspective. “You need to have some ground rules, and the main ground rule is, are you going to be truly helpful to the customer in what you’re offering to do?” Govil said. “If not, think again before you do it. The reality is we have enough data to get very, very personalized, but you have to be very careful about how you use the data.”

Keep this page bookmarked for articles from the event, follow us on X (formerly Twitter) @BizTechMagazine and join the event conversation at @digbanking.