The rising availability of customer data means customer-centricity should be the top priority of every financial institution today. Faster moving, less regulated industries like retail and digital services have been quick to capitalise on the opportunities to improve the customer experience that data has afforded them. Comparatively retail banks, insurance and financial services organisations have been glacially slow off the mark, hampered and herded by regulation in equal measure.

Now, after years of customer data and digital projects aimed squarely at avoiding the whipping stick of the regulator, have banks finally spotted the digital data carrot? Services like Google wallet, Apple Pay and in Facebook payments are just a couple of examples of how digital giants are developing monetary capabilities to usurp traditional banks. With the emergence of services like social banking app Kitti from Santander, contactless fobs, bands and stickers from Barclays, banks appear to have finally identified and begun to chase the competitive advantages that the customer-centric approach data affords.

Ensuring implementation

Recent research from IDC conducted on behalf of Informatica and Cognizant shows that improved customer-centricity is often cited as a key reason for banks undertaking major technology overhauls, such as core system upgrades and large-scale harmonisation projects. However, the research also suggests that data governance projects are currently being driven by European regulators, which are becoming interested in data quality issues, and are making ever-more onerous demands for reports – to finer levels of detail and over shorter timescales.

It is true that financial institutions should see data governance investments as a way of future-proofing themselves against increasingly stringent regulatory demands. However, for financial institutions to get the full value out of their investments, they need to realise the potential for improving customer-centricity. While a regulator might want to be able to analyse data in real-time, the same might apply to a product developer, a relationship manager, or indeed an actual customer.

The pressure towards real-time is now felt just as keenly from the customer as from the regulator. As more of banking and insurance migrates towards mobile, customer expectation will be of financial partners which can provide tailored product offerings in real-time. If traditional providers aren’t able to do this, new entrants will. 

Investing in data governance is the only way to satisfy these demands. For this, there are a number of things a business must get right. At the highest level, the company must treat data as a strategic asset and a source of competitive advantage. If you are customer-centric, it should be easy to expand your relationship with the customer and grow the share of wallet. This means making use of the all the information held about a customer to ensure that the right products are offered at the right time. It is for this reason that data should be seen as a strategic asset rather than a cost centre or a regulatory burden.

Data-driven delivery

The importance of customer-centricity is no longer up for debate. Becoming truly customer-centric, which means prioritising the needs of the customer in every decision a firm takes, will be the only way for retail banks to protect their market share as younger competitors bring a new standard of service to the market.

People are now used to high standards of service from fleet-footed digital firms like Google, Amazon and Uber, and expect the same experience from their banking partners. Digital data reliant business models are also bringing new levels of customer service to different parts of the industry, and the fact that they can start with a narrow product offering and brand new technology gives them an advantage in providing a slick experience. In response, existing financial players must use their data resources to offer a more personalised experience in order to truly master a customer-centric business model.