Banks need data to fuel growth and customer experience strategies

25 August 2022 4 min. read
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As customers pivot to competitors offering more personalisation, many retail banks are struggling to provide omnichannel experiences. New research suggests banks which leverage customer data most effectively could challenge this new paradigm.

The changing needs of customers is leading to a growing gap between the perceptions of businesses and their clients. While almost seven-in-ten consumers now expected companies to understand and address their changing needs during times of disruption, businesses are finding it difficult to read the room and adjust their experiences – and an oversimplifying segmentation of these criteria has left 88% of executives saying they are facing a “crisis of relevance”.

Banking is no exception to this trend. While the sector features many historic brands, who have weathered economic and political storms over hundreds of years, the rising prominence of FinTechs has challenged incumbents more than ever before. With FinTechs offering cost-effective and seamless services, a new poll by Capgemini in collaboration with Efma has shown that some 75% of customers are attracted to the challengers – raising their expectations for digital banking.

What customers say they are not getting from their bank

A global poll of 8,051 respondents, and executive surveys and interviews with 142 banking executives suggested that if banks do not do more to change their propositions, they face an exodus of clients. While three-quarters of customers are attracted to agile, digitally-savvy challengers due to their fast, easy-to-use products and experiences, 49% of respondents also noted that their current banking relationships were neither rewarding. At the same time, 52% noted their banking experience was not ‘fun’, and 44% wished their banking service was more personalised.

Personalisation seems to be the watchword here for banks, as offering an individualised service would enable banks to more easily cater to subjective concepts such as  how much ‘fun’ banking can be, or how ‘emotionally connected’ 48% of respondents apparently wish they could be to their bank. Key to this, according to Capgemini, is the development of enhanced data governance models.

Nilesh Vaidya, Global Industry Head for Retail Banking and Wealth Management within Capgemini’s Financial Services Strategic Business Unit, explained, “The formula for growth sounds simple. Customers want to be provided with personalised experiences, regardless of wherever they may be on their own digital journey. The challenge, however, remains in execution. Retail banks must rethink their wider business models, restructuring to focus on providing the same personalized, lifestyle-enabled ecosystem journeys that customers have come to expect from their digital interactions.”

Banks face a range of data challenges

To that end, Capgemini’s analysis suggests that banks need to enhance their data governance, enabling them to collect proprietary customer intelligence, and build digital marketing strategies around it. Combining this with AI and Machine Learning (ML) could also unlock new possibilities in identifying, retaining and engaging customers with real-time experiences. However, many banks need to modernise their digital infrastructure if they are to undertake such a transformation successfully.

According to the survey, more than 70% of banking executives cited that traditional banks lack data and analytics capabilities. In particular, 95% of top global banking executives informed Capgemini’s executive survey that outdated legacy systems and core banking platforms were inhibiting efforts to optimise data and customer-centric growth strategies. As a result, some 80% believed that they could not ensure data reliability at present – preventing them from creating reliable insights. Banks are moving to correct this situation though, according to the researchers.

“To thrive in this fiercely competitive environment, with digitally native FinTechs continuing to capture a rising amount of market value, we’re seeing retail banks finally embracing innovative technologies and platform-based models to optimise this data-driven growth,” says John Berry, CEO of Efma. “While this has evolved within many of these incumbents’ digital channels, customers still expect branches to be experience centres, filled with self-service options and financial advice. By strengthening their ability to collect and analyse data, providers can identify what customers want, which ultimately is consistent omnichannel banking experiences.”