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Banks Set Stage For Customer Acquisition With Data Analytics

Data-driven customer acquisition will continue to be elusive for banks that don’t invest in effective data management processes and structures.

Mastering Data Management

Certain banks are farther along than others in being able to drive customer acquisition through data and analytics, and those institutions have started to master their own data management, says Chandan Sharma, global managing director of financial services marketing for Verizon Enterprise Solutions.

“They’ve elevated data management to a high-level… they also recognize the importance of creating these functions around data management in the right place within their organization,” he observes. “It’s then easy to have a cross-enterprise view of the customer.”

Sioux Falls, N.D.-based Great Western Bank ($9 billion in assets) is one example of an institution that has done extensive work around data management, and is now using that work as a stage to launch new customer acquisition and marketing initiatives.

“Our biggest challenge in using data and analytics for marketing and customer acquisition has been data quality, making sure that the codes are there for different documents and records,” says Ron Van Zanten, the bank’s vice president of data quality.

To address this issue the bank created a data committee with members from different teams across the organization, Van Zanten shares. The committee, which reports up into Great Western’s business intelligence operations council, created standard definitions that teams across the organization now use for different tiers, pricing and terms on accounts. Those definitions are now standardized across Great Western’s various systems, Van Zanten reports.

Ron Van Zanten, Great Western Bank
Ron Van Zanten, Great Western Bank

That data quality work has served to gain buy-in from employees across the organization by building trust in the bank’s data, Van Zanten adds. “If you have people in your organization who look at a report, and they say, ‘My loan numbers don’t match up,’ and that’s true, then it brings about doubt across the organization in what you’re doing,” he explains. “We can now validate our data, and the work that we’re doing with it.”

Gaining that buy-in across the organization isn’t always easy. Van Zanten’s team has been working to centralize Great Western’s data in its data warehouse. Sometimes parts of an organization can be reluctant to give up their data, he notes.

“We’ve taken the ‘source of truth’ from different silos and put it in our warehouse… some people have to give up the keys to their kingdoms. But this is now freeing up our staff to do new things, instead of producing the same old reports,” he remarks.

With this clean, well-defined data in hand, Great Western has started to cast a net for more profitable customers to help grow the bank. Great Western used to give away free checking to new customers in its branches, but now with the knowledge gained through its data management, the bank is working to entice customers who will have a more sticky relationship with the bank and buy value-add services, Van Zanten says.

About two months ago Great Western started purchasing demographic data from Experian to add to its own data and start to build profiles of what profitable customers look like and how to market to them, Van Zanten reports.

“We’ve built a new system so when a new customer opens an account we can see what similar customers like. If they open a debit card, we can offer things like direct deposit and push e-statements… and entice them to a more sticky relationship,” he adds.

The bank has also worked to better price its products for profitability by factoring in the cost of expenses on products into their price. “We can bake in the cost of funds transfers and operational costs, and take direct income and expenses on accounts, and then post those against savings and loans,” Van Zanten explains.

Great Western can now assign a numeric digit for onboarding a particular account, such as a consumer checking or a small business account, and fully understand the cost of servicing that account.

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
2/18/2014 | 8:16:22 PM
re: Banks Set Stage For Customer Acquisition With Data Analytics
Yes there is a lot of experimentation going on right now. Even the banks that I mentioned in the article would admit that they haven't totally answered all of the questions around gaining actionable insights from their data, and are still trying new things. I am curious though, what do you think is unique about the potential for MCX? I think it definitely has to be taken seriously because of its backing from the retailers. But I don't feel that I know enough about it yet to judge its potential.
Jonathan_Camhi
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Jonathan_Camhi,
User Rank: Author
2/18/2014 | 8:12:27 PM
re: Banks Set Stage For Customer Acquisition With Data Analytics
Yes that's totally true, but there is also the potential for new technology to go around the limitations created by data silos. SAP has been pushing in-memory analytics with it HANA platform, which is one example of a solution that tries to circumnavigate those obstacles. But there are still data quality issues that have to be dealt with regardless.
GHERGENROEDER211
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GHERGENROEDER211,
User Rank: Apprentice
2/13/2014 | 6:03:03 PM
re: Banks Set Stage For Customer Acquisition With Data Analytics
Bankers and retailers are sharing data to advance value chains for consumers. So far most of these initiatives have been fragmented and have not hit the mark yet. MCX is one initiative that is interesting. But, a lot more needs to be done to gain a critical mass of acceptance. The land rush is on and lots of people are spending a lot of money. it is going to interesting to follow this complex ecosystem of smarter commerce.
Ivy Schmerken
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Ivy Schmerken,
User Rank: Author
2/13/2014 | 4:49:49 PM
re: Banks Set Stage For Customer Acquisition With Data Analytics
You raise an important point around CRM. So many banks and brokerages adopted CRM even way back in the 1990s and post-2000s, so it's questionable as to why they are unable to access this data. Perhaps CRM data has been put into a silo that doesn't relate to hierarchy of reference data? Products like Salesforce are cloud-based. So would this be easier to integrate into a more holistic customer data analytics organization?
KBurger
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KBurger,
User Rank: Strategist
2/12/2014 | 9:00:56 PM
re: Banks Set Stage For Customer Acquisition With Data Analytics
It's a bit surprising to me that so many banks still are so far behind in terms of the infrastructure needed to gain intelligence from customer data. It's not a new topic and one would think that the failures/frustrations around CRM implementation from 10 years ago might have taught some lessons about what needs to be in place to really be able to derive benefits from investments in analytics and other tools. Probably part of the problem has to do with the focus on cost cutting, compliance, risk management, etc. of the post-crisis era -- but shouldn't they be able to leverage some of those efforts? Another problem is that, while banks are still building the foundations for effective customer analytics, other industries will a) potentially swoop in and grab some of the potential customers, and b) the analytics/big data talent that banks need to optimize these capabilities will go elsewhere.
Ivy Schmerken
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Ivy Schmerken,
User Rank: Author
2/12/2014 | 2:31:47 AM
re: Banks Set Stage For Customer Acquisition With Data Analytics
It seems like banks need to get their data management houses in order before they can move forward with analyzing customer data and use emerging technologies such as predictive analytics. If they need to first build the "hierarchies and taxonomies" to organize their data, this could take a few years before they are ready to build an architecture for data and customer analytics.
Byurcan
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Byurcan,
User Rank: Author
2/11/2014 | 5:04:47 PM
re: Banks Set Stage For Customer Acquisition With Data Analytics
The statistic about the most common challenges to achieving customer-centricity being the sheer volume of data is a familiar one. It seems like effective data analytics tools are more in demand than ever before.
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