Challenge accepted: How banks can use customer data to beat the digital competition

Amplifi explores how effective customer master data management can help established mid-tier banks challenge the digital competition.

Banking, to state the obvious, has changed. Yet while digitisation has transformed the way that financial services are delivered, what hasn’t changed fundamentally is what people really want from their banks.

The days of the local bank branch, with a bank manager that you know and trust, offering advice and products that are bespoke to you, might be long gone for most, but demand for the core principals behind that relationship has not. People still want convenience, trust, authenticity, personalisation and flexibility. They just want it in a different package in the digital age.

Instead of a local branch, people want the convenience of banking on the go, to fit with their hectic schedules: an estimated 93% of the UK used online banking in 2022, with 49% citing convenience as a driving factor. Instead of a personal relationship with a representative, they want trust in the brand they bank with. As for products, they want offers that are bespoke to their circumstances – same as they always have.

It’s for these reasons that digital banks are experiencing such dramatic growth. By using data to react fast, adapt their offering, and customise their communications, they’re able to quickly and effectively offer their clients what they want from their financial services providers. To illustrate the rate of this growth, between 2022-2023.

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Yet while these banks are accelerating fast, it’s important not to lose context. Starling, Monzo and Revolut have 2.7 million, 7 million and 28 million customers respectively in 2022, while Barclays and HSBC have 48m and 39m. Yet while established banks still have the majority, it’s clear demand is steadily growing for a new type of banking experience – almost a quarter of the UK has an online-only bank account in 2023, with a further 10% intending to get one – and digital banks are fast encroaching on mid-tier customer volumes. Monzo had almost triple the number of customers compared to Metro Bank last year, with even the smaller Starling inching ahead of their 2.6 million clients.

In a world where customers demand to be able to open a new bank account, apply for a mortgage or switch their provider instantly, traditional banks need to adapt to the new normal, or else they might find themselves on the ropes. But to do this, they need to solve their data challenges, whether that’s fragmented customer data across different business units or inaccurate data in legacy systems. These new online-only banks benefit from being digital natives, free from the legacy data and technology baggage of more established institutions. If they want to catch up with digital innovation, banks need to tackle their ingrained data challenges.

An integrated data strategy – one based on consolidating customer data into a single source of truth - can help banks re-evaluate their data estate , helping them to target customers with personalised options, faster services and an all-round better banking experience. But how?

DING DING DING! Let’s get ready for a royal data rumble.

Round 1: Data siloes VS a 360-degree view of your customers

Banks often have disparate data touchpoints feeding into their company, meaning data is segregated into siloes that aren’t connected to one another.

For example, mortgage handlers may have access to property values, while wealth managers can see a customer’s net worth – but there’s no integrated source of data to join them together. This could mean you could end up pitching offers and special rates to customers that just aren’t relevant (a customer with a high-value property, for example, isn’t interested in offers or accounts suited to first-time buyers) but how can you target consumers effectively without having a full picture of that consumer through their data?

This siloing of data could be down to any number of reasons. It could be because banks want to protect customer privacy and avoid hefty fines for breaking the rules. It might be because they have legacy systems that trillions of dollars pass through every day, making every change a pretty significant (not to mention high-risk) feat. Or it could be down to poor data governance and a lack of a single, central repository for their data.

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The more disparate the data sources, the harder it is to get a 360-degree view of the customer. This makes it more difficult for banks to connect with their customers. After all, once someone’s received a ‘personalised’ mortgage offer for the fifth time with no intention of buying, you wouldn’t blame them for thinking their bank might not be right for them.

If instead of storing data in siloes, banks can combine this data to get a comprehensive view of each individual customer (e.g. their age, their lifestyle, their interests and the stage they are at in life), they’ll be in a much better position to offer personalised services, nurture customer relations and build trust. It’ll not only allow more established banks to compete more effectively with new challenger banks, but explore innovative and exclusive services that younger banks can’t offer.

End of Round 1: A win for a centralised, single source of data.

Round 2: Run-of-the-mill banking VS a memorable customer experience

Banks need to find ways to retain their customers so that they don’t flock to glossy, new contenders – but to do this they need to find ways to appeal to customers ready to make the jump. The only way to do that is to have a strong, clear view of customer data that facilitates deeper analysis and targeted marketing.

Part of the appeal of challenger banks in the UK has been taking a more focused approach to target specific customer needs. Monese and Monzo, for example, both offer highly capable mobile apps that give enhanced budgeting options (and more recently for Monzo, a competitive and convenient savings offer), while ClearBank has set itself apart by being the only clearing bank in the UK that does not offer retail banking services.

Banks need to use data to segment their customers and offer them the best possible products and services to match their personal experience. If a customer feels like their wants and needs are being catered for, they’ll be much less inclined to jump ship to a challenger bank.

End of Round 2: Banks can win by using data to find their customers’ weakness.

Round 3: Going it alone VS a data governance solution you can trust

According to a Gartner report, 80% of heritage financial services firms could struggle to remain relevant by 2030 as digital platforms, FinTechs and non-traditional challengers gain greater market share.

If traditional retail banks want to survive, they need to get a handle on their data so that they can nurture customer relationships, retain loyal customers and attract new ones. And in this respect, Amplifi is well placed to tip the odds in your favour.

Amplifi’s master data management financial solution cleans, validates and integrates your data to create one seamless point of reference for all your critical information. We help banks to take control and leverage their data, ensuring it is harmonised across departments, instead of divvied up into silos.

So, if disparate data sources and expensive legacy tech is making you think about throwing in the towel, we can help. Download our guide to Customer MDM in the financial sector to find out more, or get in touch. Amplifi will get you match-ready with a single, authoritative view of business-critical data across your organisation, providing insightful, actionable and clean data.

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