The Critical Role of Analytics Driven Insight in the Financial Services Sector

February 25, 2016 Korey Thurber

 

There is a critical need for Analytics Driven Insight in the Financial Services (FiServ) sector. The customer journey is no longer solely about the in-branch experience or siloed traditional marketing deployed by marketers. Today, a FiServ institution can influence the customer experience across a multitude of interaction points.

Examining specific sectors within Financial Services, there is a tremendous amount of disruption at the various interaction points across the customer journey:

Retail Banking: The branch network is still highly relevant today but expect routine transactions to continue to migrate from “brick-and-mortar” outlets at the rate of 4% – 5% annually. Financial Services institutions are continuing to turn their attention to the digitization of transactions as well as the digitization of the in-branch experience by integrating digital tools for the branch staff to use to improve service.

Consumer Lending/Credit: Financial Technology – also known “FinTech” companies are the big drivers of disruption in consumer finance. Companies like borro and LendingClub to name a couple have stormed in and grabbed up market share from traditional banks. These same traditional banks are now scrambling to make up lost ground by partnering with or acquiring FinTech firms to create more impactful and relevant interaction points for their customers. In addition, companies like PayPal and bitpay have and will continue to change the way people pay for goods and services, which in turn will continue to influence how we use the old-school “plastic” in our wallets.

Wealth Management: Traditional Wealth Management entities are starting to augment their core, face-to-face wealth management advisor capabilities with online capabilities. Millennials are arguably the most critical segment in the marketplace and as they build wealth, Wealth Management organizations need to be ready to interact and engage with them using the appropriate channels, technology, etc.

State of Analytics Driven Insight in Financial Services
So how do Financial Services institutions best inform marketing and business strategies across the sectors mentioned previously? Analytics driven insight is the key! Marketing analytics have been a mainstream, high-value add in the Financial Services industry for quite some time. In fact, many would agree that marketing analytics essentially “grew-up” in the FiServ sector, driven in large part by the vast amount and quality of data stored by financial service institutions. The FiServ sector is a veritable playground for traditional marketing analysts and statisticians to hone their data mining and insights generating craft.

But the world has changed…..and here is what is behind it:

Exponential Data Growth: More data has been created in the past two years than in the entire history of the human race. By 2020, 1.7 megabytes of new information will be collected every second for each individual on the planet (Forbes). And it’s not only the volume of data….it’s the speed at which it is growing and the variety of sources. Financial Services consumers are generating new data by visiting provider’s websites, transacting online and interacting with various forms of online media. This new pool of data combined with more traditional direct mail, email, telemarketing and first party customer data, is a powerful enabler to better inform spend across a multitude of channel/media choices.

It’s “BIG Insight” that matters: More data is just that….”more data” unless the FiServ entity can wrangle, manipulate and mine that data for better targeting and insight. Financial services organizations have to more closely align themselves around customer’s needs as opposed to traditional product or business lines. Data analytics is driving this trend to enable FiServ institutions to become more customer oriented – not only to know who they are, but where they are (online or branch), and what types of deposit, lending, and wealth management products and services they are interested in.

Increased use of Marketing and Data Management Platforms (DMPs): What used to be available to only the largest financial service institutions is now becoming much more prevalent in mid-tier institutions, enabling them to coordinate and optimize customer interaction points across online and offline channels. By utilizing a DMP the Analysts can more clearly understand WHAT action is being taken and in what channel, WHEN it is being taken, and WHO is taking it. By also incorporating first-party data and having the appropriate tags placed on each page of the digital journey, financial services analysts will have a plethora of data to influence and optimize experiences across the entire customer journey.

Customer-Centric Analytics…NOT Digital Analytics: It wasn’t that long ago that digital marketing was primarily about broad reaching ad buys based less on robust targeting and more on what “felt like the best thing to do”. The “old school” individual/household level data that Financial Services Analysts cut their teeth on has now become a reality in the digital space! Digital marketing is very simply becoming more addressable and more targeted, with a greater portion of ad spend happening at a very targeted individual level. All the analytic disciplines (campaign test design, campaign analytics, predictive models, segmentation, frequency and cadence of touch, etc.) that grew-up in the FiServ sector using individual and household level data, is now being used heavily across addressable digital media – as well as in conjunction with traditional offline data. Everything that was “old” has become “new” again. Please also see my related and recent blog post on fractional attribution.

Harte Hanks has a team of Analysts, Data Scientists and Strategists to help you navigate the new landscape. Is your company fully utilizing Analytics driven insights to better inform business and marketing strategy? Tweet us at @HarteHanks and share your experience with us.

 

About the Author

Korey Thurber

Biography

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