Four data must-haves to help banks drive engaged loyalty

Banks turn passively loyal customers into brand advocates by investing in the proper data foundation to personalize the customer experience.

By David Ritter

Many use different banks for checking, savings, and brokerage accounts. Even the most satisfied customers use at least three financial institutions.

So why do customers stick with their primary bank? And what is a primary bank anyway? We think of a primary bank account as the one that receives your payroll direct deposit and is used to pay most of your bills.

For many customers, the truth is that it might simply take too much work to move to a new bank. So as a matter of convenience, many stick with what they know.

But those customers are only loyal in a passive sense. Without an experience that exceeds expectations, they will not likely favor any financial institution when seeking a new financial product. And they’re even less likely to consolidate all their business at one bank.

So how do banks turn these “passively” loyal customers into brand advocates? By investing in the proper data foundation to personalize the customer experience.

Here are four data must-haves to help:

1. Clean, organized data

Many banks collect customer data from digital and physical transactions, credit databases, social media, etc. But that information is only sometimes clean or neatly organized.

A bank might store customers’ home addresses using a database. But these records may need to distinguish primary addresses from temporary ones (like a summer home or college dorm). Or perhaps there must be a tool to flag typos at the entry point. If the marketing team wants to send personalized mailers, they might end up at the wrong address—or even reach the wrong person altogether.

The bottom line: If customer data is not clean or organized, it’s not usable in a way that can impact the customer experience.

What’s more: Data teams spend nearly half their time on cleaning and organizational tasks. That’s time that could be spent building models and extracting customer insights to serve customers better and sell additional products.

So how can banks improve their “data hygiene”? Here’s what I recommend:

Validate data at the point of entry. Ensure your digital tools can automatically verify the accuracy of a ZIP code, telephone number or email address before entering your system.

Invest in automated data cleaning software. Teams can define rules and filters to correctly tag information (say, by transaction type or demographic) and sift out duplicates—a huge time saver for employees.

Conduct regular data hygiene checks. At least once a year, review customer information to identify your biggest data cleanliness problems and measure their impact.

2. A centralized customer data platform

More than 50 percent of banks use multiple, disconnected systems to collect and store customer data. But this siloed approach makes it difficult for employees to understand customers’ needs thoroughly.

For example, the brokerage and banking units may need to share core internal systems at a large bank. So if a decades-long brokerage customer is opening their first savings account at the same bank, employees may need more data to offer a better interest rate or help them feel appropriately valued.

A customer data platform can help. It provides a “single source of truth” that centralizes information from multiple sources to provide a 360-degree view of each customer. A CDP helps employees personalize marketing campaigns and customer interactions. And it allows employees to monitor key statistics, like customer attrition rate, customer satisfaction score, net promoter score and more.

What should banks look for in a CDP? Choose one that can:

Build a unified customer profile. Ensure this profile resolves identities across touchpoints (email, mobile app, social media, etc.) and notes where data comes from.

Integrate with the rest of your tech stack. This way, you can view auto-updated customer data as it comes in—no matter where it’s coming from.

Comply with the latest security and privacy standards. Check your platform’s certifications with the regulations that apply to your bank.

3. A strong data governance strategy

Trust is the biggest loyalty driver for more than 40 percent of banking customers. They give banks their most sensitive personal and financial information. And they value banks that can keep that information secure.

It’s crucial to have a robust data governance strategy to protect customers’ information and maintain their trust. This way, banks can standardize who has access to data, where it’s going, and how employees should handle it.

What are the key ingredients of a robust data governance strategy? The right approach should:

  • Define roles and responsibilities for process definition, enforcement, and maintenance
  • Outline which data gets cataloged and where
  • Establish standard, reusable processes for coding and data quality control
  • Comply with state and federal banking regulations

After establishing a data governance plan, consider publishing a plain-language explanation on your website, so customers know exactly how their data is used.

4. A data-driven service model

Banks should weave data into every customer interaction to get the most out of customer data. With adequate information about each customer, employees can personalize each touchpoint. As a result, they can create more opportunities to boost customer satisfaction and sell additional financial products. The key is to adopt a data-driven service model. For example, the right approach can allow banks to:

Offer attractive mortgage rates. Banks can use customer data to offer more competitive mortgage rates based on income, assets, and loyalty.

Personalize shopping discounts. Banks can leverage transaction data to give customers rewards and discounts they’ll value (such as restaurant discounts for customers who regularly dine out.)

Create dynamic loyalty perks. Banks might increase customers’ mobile check deposit limit after having a checking account for several years.

This data-first approach to relationship building can significantly impact customer loyalty. And it can manifest in face-to-face interactions, too.

Suppose a customer expecting a new child wants a home improvement loan to add an extra bedroom to their house. Through the CDP, their loan officer can see that the customer still needs to open a college savings plan. They can then discuss the benefits, open an account, and set up automatic transfers to fund it.

The result: more inroads for personalized service that boosts customer loyalty.

Invest in customer experience to stay competitive

Passive loyalty works for banks right now, but it won’t always. To stay competitive, banks must invest in a solid data foundation.

With the right technology, data and internal practices, banks can give customers an experience tailored to their needs. This way, customers won’t just turn to their bank for new financial products. They will recommend the brand to friends, family and coworkers. And they’ll stay actively loyal for years to come.

David Ritter is director, financial services strategy at CI&T, a global digital specialist.