Smaller banks have a distinct disadvantage compared to their bigger counterparts when it comes to understanding their customers through data and analytics: they simply have fewer resources to do the job. Until recently much of the big data innovation in banking has been coming from larger institutions, but by working with partners smaller institutions are now starting to gain data-based insights on their customers as well.
“The big banks have more investment and time at using data and analytics for customer insights… but the market has a away of creating props for other organizations at a smaller scale. Silicon Valley innovation will help the late-comers catch up to the early movers,” Chandan Sharma, the global managing director of financial services marketing for Verizon Enterprise Solutions.
Sharma says that Verizon has been investing heavily in its cloud offerings to help provide the storage and compute necessary for big data and analytics at lesser cost, and established a relationship licensing cloud model with Oracle. The lower cost could enable more smaller banks to start making use of all of their data, but many banks still harbor doubts about trusting their customers’ data to a cloud provider, Sharma acknowledges.
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“Data security is a sensitive topic for financial institutions, and the risk management considerations are something that we have to work with clients on. Banks are more willing to use the cloud for data they are securing from external sources, but not as much with private customer information,” Sharma relates.
Another trend helping smaller banks take make better use of their data is improved data visualization tools that open up data insights to more staff and thereby decrease the reliance on expensive data talent, Rani Goel, the senior director for analytics product marketing in banking and telco industries at SAP. “We’re seeing much more use of data visualization and dashboards that make it easier for banks to pick up on trends more quickly… that will help make data available to many people throughout the organization, instead of making it the privilege of few people with PHD’s,” Goel explains.
One example of a smaller bank leveraging data visualization to better understand its customer data is Cadence Bank, which will be rolling out MoneyDesktop’s Insight and Target solutions in the first half of this year. The solutions will allow the bank to send relevant marketing offers to its customers based on aggregated data from MoneyDesktop’s PFM solution, which the bank is already using.
“The intuitive and easy nature of MoneyDesktop’s tool helps slice and dice the data,” says Rick Claypoole, Cadence Bank’s director of retail product management and marketing. “I like to immerse myself in a problem, and dive in without a real idea of what I’m looking for. So I like their approach to data visualization.”
The Insight and Target solutions will also allow the bank to its customers’ PFM data relating to accounts at other institutions -- an important marketing advantage for Cadence. “We position ourselves for complex relationship clients who probably have multiple bank relationships… We get this PFM data, and then we can become the primary portal provider for the customer. Then the number of touch points and marketing opportunities there are huge,” Claypoole explains.
Without a partner like MoneyDesktop, Claypoole says he would never have access to the level of aggregated data and analytics tools that the bank will have when it launches the solutions.
“I don’t have an analytics department, I probably never will. I have to farm this out. Right now we’re not close to real time [data processing and analytics] but now I will have that with Insight,” he adds. “In the quest for relevance we don’t want to compete on price. We need the next-level thinking that we can get through Insight, and be able to meet the client where they are with relevant content that is timely.”