Data Integration Is Key For Banks To Capitalize On The Digital Opportunity

The digitization of customer experience is rapidly changing the traditional retail banking business model with the use of digital and mobile devices increasingly prevalent amongst banks customers for accessing banking services. This is creating both opportunities and challenges for banks who must balance the increasing demands of their customers and stay ahead of their competitors in the digital marketplace.

Last year a publication from McKinsey estimated that digital transformation would put upwards of 30 percent of the revenues of a typical European bank in play, particularly in high-turnover products such as personal loans and payments. The article also estimated that banks can remove 20 to 25 percent of their cost base by leveraging the shift towards digital to transform how they process and service customers.

While moves towards digital are enabling banks to pursue a broader range of opportunities with their customers one area that continues to stifle bank development is their management of data. Data is a huge issue for banks and their reliance on outdated methods of data capture, retention and use represents a real threat to their business models in the future.

As new products and distribution channels are introduced banks must continually develop new techniques to address fraud and protect their customers however many existing banking processes are old and unsecure. Customer identification, for example, is just one area where old methods of data capture and management are still heavily relied upon with traditional forms of identification such as passports and driving licenses used for a range of customer interactions.

Banks’ inability to share customer data across different distribution channels also falls short of the expectations of a more digitally advanced customer base who want instant service delivery and for every interaction with their bank to be as seamless as possible.  With multiple customer engagement points across many different service lines, such as loans, credit cards and mortgages, it is no longer acceptable for customers to be required to duplicate and re-key their information when taking on a new service from their bank. This data should already be held by the institution and should be easily shared across functions.

Country borders are also a big challenge for banks and the local branch infrastructure that exists in most countries is not suited to the increasingly mobile, globalized and digital customers of today. No longer is it a given that the location where a customer opens their account is the location where they live, work or spend the most amount of their time. Local regulatory structures and threat of fraud and tax avoidance are clear hurdles to ubiquitous cross-border banking services however even if these obstacles didn’t exist financial systems are not united enough in their management of customer data to make truly location agnostic banking services available to customers.

If banks are going to utilize a truly digital, cross-channel approach to serving customers they need to better leverage the customer data that’s available as a result of digital and mobile technology. Customer movements, for example, can be correlated using Facebook and can be used as a secondary forms of authentication to prove a customer is using bank services in a certain location. Similarly, the data captured on mobile devices can be exploited to add layers of security to payments and transactions and enhance the services available to customers.

Putting customers at the center of an integrated approach to managing data enables banks to convert each of their channels from a mere dispenser of services or product information. Only with a fully integrated data model will banks become a service that customers can call on whenever, wherever and however they choose.