4 ways your bank can use data to power its digital banking strategy
More data is great, but the right data? Well, that’s even better 💯
In 2021, the name of the digital banking game is data. But it’s not just the data you’ve got that count—it’s what you do with it.
When it comes to helping customers, most financial institutions sit on piles of insightful customer data that can tell you a lot about who your customers are, how they spend, and what they need. But the struggle comes from not knowing what to do with all of that data (and what data you should be looking at).
The way we see it, there are four key advantages to using data to inform and power your digital banking strategies:
- Your FI will come to understand its customers on a deeper level
- Personalizing products, advice, and services to your customers becomes easier and more actionable for your FI
- Financial literacy becomes a staple of your digital and mobile banking tools and touchpoints
- Your FI gains access to the right customer data rather than more surface-level data
More on these four advantages below. But first, let’s dive into why big banks and financial institutions need to be using deeper data to help their customers. Hint: it’s not just about fancy UX 😉
Why is data key to your digital banking strategies?
Between alternative fintechs, hip new neobanks and challenger banks, and the pesky GAFAs of the world, customers are constantly flooded with endless options for their financial management needs that financial institutions have to compete with. And for their customers — especially the younger ones, like millennials and Gen Z — those long-standing, traditional banking solutions that big banks have hung their hats on simply don’t make the cut anymore.
All of this forces FIs to find new, unique ways to serve these segments with customer-centric, financial wellness-focused solutions that go beyond your typical online banking tools or mobile banking apps. That’s because, today, having a mobile banking app is table stakes.
FIs have to start harnessing customer data to help customers become more financially resilient, understanding who they are and how they spend. The challenge lies in knowing what to do with that data.
In the eyes of customers, most financial institutions struggle to understand them and their needs, leading many to believe that their FI has no impact on their financial health and wellbeing.
So, what can your FI do to change that sentiment? Well, you can start by integrating data into the core of your digital banking strategy (and start doing it today). Let’s break down how 👇
1. Using data to understand your customers on the deepest level possible
In order to keep up with big tech that’s gunning for your customers, you need to use your customers’ data to help propel their financial wellness forward — starting with knowing who they are, how they spend, and what their real needs are.
This means leveraging your customers’ everyday spend to understand how purchase and spend behaviors not only match but also differ between your customers, leading to more effective targeting and personalization.
You’ll have the insights necessary to understand what your customers need, when they need it, and how it will benefit them long-term. This nurtures more loyal, engaged, and financially resilient customers that repeatedly use your digital banking tools.
2. Personalizing advice and products to your customers
Customers want their banks and credit unions to help them achieve their goals through services and products that are targeted to them. Your financial institution needs deeper data if it hopes to offer that level of personalization.
When 54% of customers want more specific, real-time banking offers, it’s clear that generic tools, services, and product offerings no longer do the trick. For FIs, helping your customers and keeping them from turning to big tech requires two key things:
- Provide the right financial advice and insights that help your customers understand their spend (and how they can nurture healthier financial habits); and
- Tailor products and solutions to your customers that meet their needs right now, where they are at this stage of their lives, and where they’re headed
Serving your customers with timely, relevant, and beneficial services that make a positive impact on their financial health is a surefire way to retain them by building better, more trusting relationships with customers that will bank with you for life.
3. Making financial literacy the norm
Whether a customer has just signed up with your bank to open a new account or has kept a basic account or line of credit with you for years, you can use their spend data to tailor curated resources and advice to that customer based on their spend behaviors — all in your digital banking tools.
Providing customers with access to the right knowledge and insights from experts in your financial institutions can help them learn about their finances and take control of their spend habits. This can make the difference between customers who are struggling financially or thriving.
Financial education, information, and literacy should be the norm for every customer that banks with you — from that first digital touch-point to everyday tools, push notifications, email marketing, in-person interactions at branches, and more. With the right data, you’ll understand which financial literacy resources make the most sense for specific segments of customers — wherever they are in their financial journey.
When you help your customers understand their spend and educate them on their finances, you nurture healthier spend habits and give them the tools they’ll use time and again to grow their wealth.
4. Harnessing the right data versus “more data”
Options for your customers are endless. They could bank with big tech — in fact, 40% of millennials are already willing to — or they could turn to an alternative fintech provider.
But they don’t have to. Not when your financial institution uses the right data to help them achieve their financial goals.
Now, there’s a lot of data you have at your disposal, so it doesn’t make sense to simply mine for more of it. Instead, you want to look at the right data — like that gathered from everyday spend that illuminates insights into life stages, life cycles, purchase behaviors, spend habits, savings opportunities, and more.
By harnessing this data, your FI can break down the barriers between itself and its customers. Consider the following:
- 78% of customers are happy to share their banking data if they get better, faster services in return
- 41% of the time, customers think the products and services their banks offer them are offered only with the bank’s best interest in mind
- 42% of customers want their banks to provide them with timely insights and solutions as their needs arise
Your financial institution gains access to more data as customers use your digital banking tools more frequently, resulting in better, richer insights from more meaningful data. You can share these insights with your customers and help them spend smarter, saving more wisely.
After all, more data is great, but the right data is even better.
Meet the author 👋
This article was written by Brad Matsugu, our Product Strategy Director here at Sensibill and an experienced product leader in both the private and public sectors. He’s also pretty great at basketball and has a newfound appreciation for quarantine haircuts.
P.s. if you found this article helpful, you’ll probably like our Ebook on personalization in digital banking. You can grab it here 👍
