“Banks are sitting on a large deposit of gold – and they intend to mine it”
The Wall Street Journal
Big data is being collected and utilized by many industries in order to make better business decisions and leverage their businesses. One of the industries that owns a vast amount of customer data is banking. With the acceptance of digital banking and a variety of data collecting tools, banks are collecting an enormous amount of information about their customers and are looking for different ways in which they can utilize that information.
Banks can see what their customers are buying and what services they are using by looking into their customer's credit and debit card purchase history. By being able to check their customer account activities, banks know who their customers work for, what bills they are paying and they know their customer’s wealth, spending and borrowing history. This information can be used to cultivate customer loyalty as well as to improve account profitability by offering personalized offers to their customers. For example, if a bank notices that their customer has been eating lunch at different college branches they might send a student loan offer to that customer. If a bank sees that their customer has been purchasing a variety of car repair services it can send a pre-approved car loan offer to that customer using the credit information it already has. Banks are also investing money in creating more sophisticated technologies that would help them to improve their profitability by better targeting existing clients with relevant offers or selling more services to their potential customers.
The utilization of Big Data will help banks to better segment their customers based on their spending habits and patterns. By segmenting their customers into a variety of groups will allow banks to tailor their marketing campaigns and to better target a specific group with relevant offers.
J.P Morgan Chase & Co. is using their customer data to determine when and which offers should be sent to their customers and which offers shouldn’t be sent. 1 For example, if the bank’s records show that their client recently complained about credit or debit card fraud, they would not send an offer to that client with a proposal to open a new credit card or to increase their credit line since it will likely irritate the customer due to the recent frustrating experience.
One of the greatest issues that harm banks and their clientele is cyber-attack. Criminals are breaking into bank accounts and stealing their data and their money. According to the insurer Allianz, cyber crimes are costing the global economy nearly half a trillion dollars a year.2 One of the most common ways cybercrimes occur is during online bank transfers. When customers access their online bank accounts, the hacker may intercept the username and password and within seconds transfer money to an overseas account (Vice President of CBIZ Kris St. Martin). Therefore, banks are using Big Data to find a variety of ways in which they can improve cyber security.
Mobile customized branded apps are improving the ways in which customers can use and manage their bank accounts. People can access their accounts anytime and any place. It saves a lot of time and cuts the cost of banking customer service representatives.
By utilizing Big Data to its full potential, banks will be able to better understand their client requirements and therefore provide services to them, including to help them to detect and prevent fraud, process transactions faster, run more sophisticated marketing campaigns, improve customer relations as well as to leverage their business and increase revenues.
2. NGDATA, March 25, 2017. https://www.ngdata.com/big-data-technology-trends-in-banking/
Interesting and very insightful. Thanks for sharing.
ReplyDelete