Harnessing financial data to modernize banking and mortgage products

A customer-first approach has the potential to unlock serious growth.

By Joe Welu

The banking and lending industries have made significant strides in the past few decades, adopting innovative technology and marketing tactics to better serve their customers. But after the 2007-2009 financial crisis, many financial institutions set innovation aside, instead prioritizing reliable products that generated predictable revenue.

This conservative approach, coupled with new regulations and mistrust from the public, limited the adoption of significant innovation for most of the decade that followed. While big data and customer analytics rapidly transformed other industries—providing insights on changing customer needs to guide product development and services—the financial services industry largely retained its product-centric, safe approach.

Jump to 2022, and there’s no question that fintech disruptors have cracked the code on understanding the customer-centric approach and how it impacts customer buying behaviors. Now more than ever, consumers can see right through a product-heavy sales pitch. Disruptors quickly took advantage of this mistrust in financial institutions and began delivering personalized, digital-first financial tools with alluring branding and prices.

Fortunately, this formula isn’t unique to Silicon Valley. Banks can use available financial data to unlock insights that help their employees deliver intentionally designed offerings and experiences that drive desired outcomes at precisely the right time.

The new financial consumer

Why now? There’s no question that COVID-19 fast-tracked changes in consumer expectations, with experts estimating the digital transformation timeline jumped ahead six or seven years from March to December of 2020. Customers now expect more personalized offerings and frictionless, intuitive, and digital-first experiences. As needs evolved during the pandemic, consumers found that the best brands knew exactly what they needed, when they needed it, without asking. And now, they expect it from every brand they interact with. This is where many banking institutions and lenders can improve.

A December 2021 survey by Total Expert found that only 31 percent of consumers surveyed believe their primary financial institution offers relevant products or creates new offerings. To solve this and meet new consumer expectations, the narrative must move from “Here are our products — find what you need,” to “We know what kind of financial products, services or insights you need right now, Here is an offering we have configured just for you.” This customer-first approach has the potential to unlock serious growth.

If traditional financial institutions can utilize their extensive knowledge of financial products to tailor-fit their offering to what the consumer needs at any given life stage, they can eliminate concerns that fintech firms can compete for traditional, lifelong customer loyalty.

Understanding the customer journey

In order to anticipate a customer’s needs before they can themselves, banks should understand the entire customer journey. People do not typically think about managing money, borrowing money and understanding money as completely different activities. These are all part of the same path toward achieving financial goals. While fintech firms have selectively picked individual elements from that journey to focus on, traditional institutions have the upper hand. It is clear that trusting a single provider is the simpler, seamless option for the customer, as long as that provider can demonstrate that it fully understands the customer.

The key to achieving this is data—and more importantly, taking action on it. If financial institutions and lenders can harness the financial data that streams into their organizations every day, they can get a clearer picture of their customers and the touchpoints along their financial journeys. As customers mature and move through big and small financial events, this data can evolve and unlock real-time understandings to inform product fit.

Imagine the ability to offer a low-friction mortgage experience to a customer who has just started searching for a first home, or reaching out to a customer with a 17-year-old child with a perfectly timed lending solution for college. Financial institutions can go beyond the simplicity of offering a product (what fintech firms offer) and move toward the simplicity of promoting financial goals and overall financial health.

The data and the tools

Managing data is the key to understanding customer intent, and financial institutions have no shortage of data. But how can you blend that data with real-time industry information to get a comprehensive view? How can you filter the data down to actionable insights? These are the questions that have prevented many institutions from unlocking deeper customer relationships. In-house data science, AI or machine learning staff can be expensive, and few banking institutions and lenders have the capacity to integrate critical customer data from an ecosystem of third-party providers.

“If financial institutions can harness the financial data that streams into their organizations every day, they can get a clearer picture of their customers and the touchpoints along their financial journeys.”

New technologies have solved this data problem by combining data integration, analytics and marketing automation into single end-to-end platforms. Focused solution providers are developing customer engagement platforms that are purpose-built for financial institutions. Using real-time customer data, lenders can be notified when their customers trigger clear intent signals, such as a mortgage credit inquiry.

Harnessing customer data to the fullest potential and using those insights to create hyper-personalized experiences empowers banking institutions to transform into customer-first organizations as well as offer valuable financial coaching. Providing customers with predictive and tailored financial guidance allows lenders to further build the meaningful personal relationships on which the banking industry was founded.

Harnessing customer insights to power product innovation

Playing catch-up will only get financial institutions so far. They benefit by modernizing their customer experience to match the personalized marketing capabilities that data and CRM tools now provide. Transforming CX goes beyond personalized, well-timed marketing. It must reach the products. If banks are able to predict customer intent and create engaging marketing messaging throughout the entire customer journey but it still only leads their customers to a product that was designed with a one-size-fits-all approach, a promising lead could quickly turn into a wasted opportunity.

To avoid another decade of catch-up, banking institutions and lenders need to apply their hard-earned customer intelligence to evolve their product offerings. Banks benefit by understanding their customers’ specific needs, recognizing how their life stage and environment impact how they engage with their product and using that information to create hyper-personalized product offerings. For example, offering loans specifically designed for young families, purpose-built to support stability and flexibility today while helping them achieve long-term financial goals.

In this future state, the line between product design and delivery—between customer experience and product innovation—only gets blurrier. The most successful financial institutions will harness deep and broad customer intelligence to power a culture of customer-centricity, delivering empowering messaging and products that help customers meet their financial goals.

Joe Welu is the founder and CEO of Total Expert. Find him on Twitter: @JoeWelu.