Mining for Gold in Your Customer Files
By: Trent Fleming
A popular phrase you may have heard recently is “big data.” The idea is not new; the proliferation of marketing central information file systems in the late 1990s was really about the same thing: Institutions have a treasure trove of information about their customers and should be using it to their advantages.
For most banks, the investment in a marketing CIF system was a bad one. The systems were not bad — they offered great ability to analyze customer data and create effective marketing campaigns. The data was often inaccurate, however.
In my experience, the typical bank has done a poor job at all aspects of the big data game: gathering, organizing and utilizing customer information. Why? Because in the process of converting systems — something many banks have done numerous times in the last two decades — customer data is truncated or scrambled in ways that create challenges for effectively using that data for marketing purposes. As a result, banks find themselves with multiple records for the same customer, and customer accounts linked to several records. The result is a poor picture of a customer’s overall relationship with the bank.
Cleaning up this data, often called scrubbing, is one of the most difficult tasks facing banks today. It is essential, however, if banks are to improve their customer service and marketing capabilities. There remains no substitute for knowledgeable bank employees reviewing reports that attempt to identify duplicate customer files, and performing the merging of data necessary to ensure that each customer has a single record, with all banking relationships tied to it.
This is a daunting task, but if the bank prioritizes the effort and takes simple steps, it gets easier. Start with business accounts and those consumer accounts that have the most potential to be profitable. Insist on regular progress reports and maintain an attitude of importance regarding the project.
Next, initiate a program whereby additional data is regularly gathered and validated so that the bank has current information about the bigger picture of customers’ activities, and maintain current email addresses, business and employment data, even civic involvement. Think of the process many utilities use when you call them. Customers often hear, “while we have you on the phone, may we verify that we have a correct (phone number, address, email address) for you?” Such efforts help companies to maintain accurate customer contact information and customers are used to them.
Meta data, loosely translated, is a term that means “data about the data.” In an institution’s context, it means non-account specific information about customers. For example, commercial lenders will have insight into the operations of a business that is not generally contained in the bank’s customer files. It is important to commit this information to institutional memory, using notes fields within the core system, or even a third-party sales-management product.
The institution’s ability to serve customers, and offer targeted products and services to them, is often dependent on this big picture view of their situations. A method that has worked for me is a brainstorming session whereby key officers and managers meet to discuss a handful of business accounts in detail. These accounts are generally chosen by identifying high-volume transaction accounts, large depositors or large loan accounts. Over time, staff can identify other accounts that should also be discussed in this fashion. An added benefit is the heightened awareness of the value of this data going forward.
There are no easy answers for a big data solution. Instead, a well-laid plan of consistently improving the quality of basic customer information, adding essential meta-data and seeking to constantly verify and refresh the information you have, will provide the ability to target market more accurately. Do not lose sight of the goal: Improving the quality and accuracy of information the bank has about customers will allow it to improve customer satisfaction, execute well on cross-selling opportunities and even lower costs.
Trent Fleming is an adviser to financial institutions on matters of technology, strategy and management.
Copyright (c) September 2013 by BankNews Media
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