Five Steps for Using Data to Become Your Customers’ Primary Financial Institution

By Laura Costello 
The proliferation of fintech options for consumers poses significant challenges for traditional banks in the digital age. As customers go to various apps and other digital providers for banking services, they are less likely to see one institution as their primary financial services provider. In fact, BAI’s 2020 Banking Outlook study found that the number of customers expecting to stick with their primary financial institution in 2021 fell across every demographic, compared to the results from the same study in 2019.
Banks that want to maintain primary relationships must focus on intelligent and deliberate data usage to deliver relevant, personalized product and service recommendations that drive both improved customer experiences and increased revenue for the organization. What banks must recognize, of course, is that collecting data and using it effectively are different things. To discover untapped opportunities to engage customers and reach primary financial institution status, bank marketers should follow these five steps:

1. Define exactly what being a primary financial institution means to you

Customer needs and institutional goals will vary from institution to institution, so it’s important to identify the characteristics that create your ideal customers and what they are looking for in their primary bank. If your ideal customers are looking for loans, for example, you’re more likely to engage them with competitive loan rates and financing options than a policy reimbursing ATM fees. If you want to maximize deposits, on the other hand, you might benefit from working with small business owners who begin the relationship by opening a business account.

2. Create a complete view of the customer

Every financial institution has access to certain kinds of customer data, but the key is compiling various silos into one overarching view that yields meaningful insights. For example, with regard to behavioral data, you might identify customers that make regular payments to another institution. The data itself isn’t actionable, but identifying the characteristics that indicate the payments are for a mortgage enables you to target the customers for a refinancing offer with your own bank.
To break data out of silos and view it all in one place, you could partner with a fintech firm that offers data analysis and organization capabilities, or you could lean on in-house personnel and resources to aggregate this information internally. From card services to marketing to brokerage or mortgage departments, each touchpoint within your institution contains valuable data that can contribute to a more robust and productive impression of a customer. The aggregate of this data will let you know if a customer aligns with your ideal persona and indicates how to strengthen your relationship with them.

3. Augment your data

The obvious customer data financial institutions have in their hands—names, addresses, account balances, products in use, and debit or credit card activity—is a great place to start gaining more insights, but it’s not enough to reach the full potential of personalization.
In many cases, partnering with third-party data providers can be an effective way for banks to build a more complete picture of the consumer. How many people live in the residence? Do they own their own home? What are their interests? Will they be thinking about purchasing a car in the next six months? These details might seem minute, but they’re highly relevant for banks that want to become a customer’s primary financial institution because they allow organizations to reach out with the right products at the right times.

4. Stay in communication

Despite what many financial institutions seem to think, good communication doesn’t necessarily mean more communication. Instead, good communication means relying on what you know about customers to contact them about a product or service at an appropriate time.
Maybe your customer is a recent college graduate seeking to purchase a home in the near future. In this case, educating that customer about the mortgage products your institution offers for first-time buyers can help turn your organization into a go-to resource and the primary financial institution of a young and promising customer. With just one additional relationship, you have increased the odds they turn to you later on for a retirement account, college savings funds for children who might not enter the picture for years, and more—all by solving a need with customer data.

5. Track your success and adapt to changing circumstances

Becoming a customer’s primary financial institution doesn’t mean your work is done. Monitor the customer journey carefully and identify reasons for attrition—particularly as the landscape for financial products and services gets more and more competitive.
It’s also important to take note of your bank’s changing definition of the ideal customer. Before 2020, many financial institutions were looking to maximize deposits and increase the number of checking accounts. In 2020, however, deposits shot up, and banks looked to grow loans. Just as the goals of your customers change, the objectives of a financial institution undergo similar changes. Periodically review and refine who your organization sees as an ideal customer to ensure you’re marketing the innovative financial services they’re looking for.
Data analytics in financial services are more important than ever, particularly as fintech trends continue to shape consumer behavior and preferences. Traditional financial institutions need to be engaging customers with the right products and services at the right time, and there’s only one way to provide that level of personalization—dig into the data and get to know your customers.
Laura Costello is the director of marketing at Saylent, a software company that deciphers behavioral data to empower financial institutions to proactively meet customer needs and discover opportunities for growth. 
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