Banks looking to maximize potential to remain competitive, serve customers and grow revenue have vast sources of insights right in front of them.
By Christian Saffici
In an era marked by digital transformation, traditional banking has moved many interactions to a mobile app or website but has not quite adapted to the digital evolution consumers need. With 80 percent of Americans now preferring digital banking over in-person experiences, this transformation provides financial institutions with a unique opportunity to use data to improve customer loyalty and drive growth.
While the shift to digital might not have created unique experiences for customers, it does mean that banks are sitting on a goldmine of untapped potential—first-party data that unlocks insights into customers’ needs and preferences. This is data derived directly from banks’ own customers and marketing efforts. This data is the key to meeting consumers’ needs for improved digital experiences.
However, tapping into this immense amount of data and identifying ways to reap its benefits comes with challenges.
Below are some actionable insights that marketing leaders should consider as they look to maximize the impact of first-party data to remain competitive, serve customers and grow revenue.
Collect the right data
Marketing teams at financial institutions know that digital advertising is on the verge of a significant disruption due to the impending deprecation of third-party cookies.
Traditionally, using data from third-party cookies was the easiest way to secure customer insights and deliver results. However, these results will soon diminish, and marketing teams will be left to identify alternative ways to gather and act on customer preferences. Without third-party cookies, banks will have limited access to customer data from external sources, making it harder to deliver personalized ads and marketing campaigns. Though third-party data collection is becoming a thing of the past, banks can invest more into gathering and organizing customer data with their new tools and cutting-edge platforms.
By using data that customers provide willingly, such as transaction records, product and service usage data, credit histories and customer service trends, banks can ensure that their efforts remain effective and compliant with new privacy restrictions.
First-party data, when collected and used ethically and securely, allows financial institutions to optimize their marketing strategy and better serve their customers, even as limitations with third-party data become more prevalent.
Invest in the right tools
Though the financial sector has tried to modernize for decades, many financial institutions still operate on legacy systems that are not well-equipped to handle the volume and complexity of customer data. These systems often create incomplete data, which results in fragmented customer journeys, inaccurate information and a lack of real-time insights to inform business decisions. Additionally, increasingly stringent regulations, such as the California Delete Act and California Consumer Privacy Act, with 10 to 12 similar acts on the horizon, introduce an element of complexity for businesses to manage customer data and pose challenges in terms of data compliance.
Banks often rely on legacy systems for most processes, including marketing efforts. These outdated systems can hold back business growth and impede customer experience. Because of this changing landscape, more banking leaders are investing in a customer data platform. CDPs serve as invaluable tools for ensuring compliance with various data protection regulations, vital to enhancing both consumer trust and brand integrity. But beyond that, they allow marketers to aggregate and cleanse data to gain actionable insights that drive tangible results for their business.
These platforms also empower banks to tailor experiences to different customer segments. For instance, by analyzing first-party data, banks can gain deep insights into their customers’ personal circumstances, allowing prediction of major life milestones that might prompt financial needs, such as buying a home, purchasing a new car or requiring additional lines of credit.
At the same time, the institution can use its data to better meet the needs of younger, digital-native customers.Which is especially important with Gen Z and Gen Alpha burgeoning as a significant segment of the consumer market. And given how simple it is for consumers to switch banks, routinely providing top-notch offers and excellent service are imperatives that banks cannot ignore.
Create a single source of truth
Creating a “single source of truth” with a CDP means building a central, unified repository of all customer-related data. It helps navigate privacy and compliance regulations while resolving the complexities associated with customers using multiple identifiers, such as various email addresses or phone numbers. By consolidating various identifiers into one comprehensive customer profile, a CDP enables more accurate targeting, personalized communication, improved customer service and more effective marketing strategies.
However, the efficiency of this process heavily depends on the sophistication of the CDP, the quality of the data integration and the protocols used for data privacy and security. With the wide range of capabilities available across CDPs, banks should look for the features that align best with their specific business goals, the size and skill set of their team, their data privacy obligations and the other tools already in their tech stack.
Navigating the landscape of customer privacy in a digital world can be challenging, especially as new regulations and customer segments are introduced. By building robust repositories of first-party customer data, banks can feel confident about making informed decisions about their business without relying on external data sources.
Christian Saffici is senior CRM consultant at Amperity.
