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Bryan Yurcan
Bryan Yurcan
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Innovation in Banking: What does the Future Hold?

Banks are focusing on maximizing the value of the data they have.

As banks seek to achieve customer-centricity, optimize the channel experience and take advantage of alternative distribution channels, it's clear that data will play a central role.

I sat in a press roundtable this week at SAP's International Financial Services Conference on innovation in banking, and tellingly much of the conversation centered on "big data" and analytics. The consensus seemed to be that not only will banks continue to try and use their existing data to better market to their customers, but also to monetize it in new ways. Falk Rieker, Global VP, Global IBU Head for Banking for SAP, mentioned Barclays' recent announcement that it will sell aggregated and anonymized data on its checking and savings account holders to other companies trying to understand customer purchasing trends as one prime example of this.

"The value of data has been, for a very long time, underestimated by financial services companies," he added.

Andy Hirst, SAP's senior director of industry marketing, said another data trend that will arise will be the combining of all the structured and increasing unstructured data banks collect into "an insight that hasn’t been possible before" on itheir customers. "Banks can find new patterns…and new trends."

Achieving true customer-centricity, relationship-based pricing and marketing, and offering customizable services were also discussed as being a major focus for banks in the future. In fact, customer-centricity will be "the biggest area of innovation" going forward, Rieker noted.

"In the past, products have been launched inside out," he added." "Banks didn’t take into account customer feedback. They just launch a new product, and assume the customer will take it."

Rieker further noted that consumers are used to being able to pick and choose what they want out of a product or service in other industries, and banks will have to follow suit in order to be successful in the future.

Ultimately, even though banks face increasing competition from non-bank competitors, they do have many inherent advantages, as companies like PayPal, Google and others can't offer the wide range of financial products banks do. However, they can't afford to simply ignore trends in consumer behavior, and creating a customer-centric model going forward will be a major part of that.

[Related: Building Trust and Innovation through Digital Banking]

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

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Byurcan
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Byurcan,
User Rank: Author
7/12/2013 | 6:57:42 PM
re: Innovation in Banking: What does the Future Hold?
Yes this was a big point of discussion as well, how banks will use social data and the ethical issues (one example brought up being if a bank monitors a competitor's twitter/FB feeds and responds to a customer who complains offering them a better deal)
KBurger
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KBurger,
User Rank: Strategist
7/12/2013 | 6:45:08 PM
re: Innovation in Banking: What does the Future Hold?
Yes that is true. It may be more a matter of perception than what actually is happening. We are seeing similar concerns in insurance (e.g., using info on social media for underwriting).
Yaldez4FSI
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Yaldez4FSI,
User Rank: Apprentice
7/12/2013 | 6:30:48 PM
re: Innovation in Banking: What does the Future Hold?
I don't think that banks have the same level of authority to mine customer calls to others that the government has done. IF a bank digs into publicly revealed social network data to find a better more personal way to market to their customers as individuals, then we will see if customers are upset or not by the response to the personalized offer, as in, they buy it or not.
KBurger
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KBurger,
User Rank: Strategist
7/12/2013 | 5:46:51 PM
re: Innovation in Banking: What does the Future Hold?
Although as you outlined there are many ways customers benefit from banks drilling deeper into customer data, I wonder if (at least short term) there may be some consumer, political and regulatory pushback because of the Snowden/NSA revelations -- if people are upset about the government mining their calls, emails, etc., they're going to be equally (more?) upset about banks doing it?
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