Growth in the use of digital channels is changing the reality of banking at a rate few predicted. This reduces costs, but also endangers banks’ sales, which are often still dependent on face-to-face interaction within branches. Consequently there is a need for banks to develop their digital channels’ sales-generation capabilities; only a few banks deliver marketing through their mobile banking channels, and online banking platforms also tend to deliver static and relatively untargeted marketing messages. On top of this, competition for customers has intensified, with new entrants looking to bite into banks’ profits, and customer expectations continue to rise as a result of the experience provided by companies such as Apple.
Data and analytics enable better sales and customer service capabilities on digital channels.
So that banks can grow their sales through digital channels, the focus should turn to optimizing customer journeys and delivering more targeted marketing. With the help of analytics and marketing technology, messages can be targeted to respond to specific needs and delivered on the preferred channel at the right time. The customer information banks already hold across their systems, and from channel interactions, is central to this. This is to some extent already a reality for Amazon, for instance, which creates content on its site that is specific to each customer, and pushes out customized offers and recommendations.
Investments in customer-related data and analytics, and in core systems are needed for next-generation banking.
Banks are increasingly interested in investing in the use of data to drive decision-making and process enhancement, but using it to better understand customers remains a gap. In Ovum’s ICT Enterprise Insights survey of 500 retail banks, 57% of the surveyed CIOs responded that exploiting information for business insight is among the top-three important trends in their organization for 2015. However, not much of the desire to be more data-driven is directed toward customer-related analytics; nearly 36% of the surveyed banking institutions do not even have established plans for using analytics in this area.
Legacy IT remains one of the main barriers to making investments in marketing and customer-related projects. Fragmented data complicates matters considerably, making it difficult to achieve a real-time (or near real-time) proposition. Achieving true next-generation customer experiences also requires investment in renewing the core systems underpinning them.
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Read the related Ovum report, Omnichannel Banking and the Future of the Customer Experience.