Customer data - your most valuable asset

The financial sector, as most others, has its share of Business Intelligence challenges. Whether these are departmentally split or deep rooted within organisational processes, the solution is most probably the same.

You need better information, for which you need data… that has to be compliant.

Data is your biggest and most critical asset. This should go without saying – in this digital age, data is the new oil! Yet, many Financial Services Institutions (FSIs) still don’t appreciate the value in the data they routinely accumulate. The wealth of data collected languishes across multiple systems, silos, or applications – making them data rich, but insight poor.

Something has got to give.

Doing something about this raises its own set of challenges. As the financial sector shifts focus from product to customer experience; namely Open X, data will play the most significant role when it comes to decision making for planning, strategising and tactical differentiation in a diverse market.

The World FinTech Report[1] from the European Financial Management Association (Efma) and Capgemini, which is based on a global survey of 116 traditional financial services firms and 40 FinTech firms (including banking and lending, payments and transfers and investment management) found these challenges:

• Customer data privacy and security
• Loss of customer data control anxiety
• Compliance and regulation changes
• Outsourcing to partners
• Differing cultural mindsets between partners and firms

If we take each of these and take a closer look…

Customer data privacy and security

The figures from the World FinTech Report survey show a high level of concern for open banking. 76% of banks are worried about data security and customer privacy, while FinTech organisations are slightly less apprehensive with only 50% worried about security and privacy.

Obviously, when selecting your customer record management systems (CRM), due diligence would have been conducted to ensure it aligned to your compliance and security requirements, which would have included the hosting data centre, fibre latency and information security protocols of suppliers for applications and software. So, let’s assume security is taken care of. That leaves data privacy and protection.

Now, we are advocates that the customer controls their data, it’s never the organisations to keep or to do with what they like… without consent! So, when GDPR came into effect (over a year ago!) we were ahead of the curve. There are many survey’s and papers that have established that customers are happy to provide data to organisations for a fair exchange, whether that is a product, service or for the good of society, all they require is that you only do what you say you will do with their data – and no more.

GDPR covers how long you store it, who it is shared with, how you contact them and more importantly for business intelligence, what is added to it and how it is processed.

FSIs, however, have extra compliance to navigate, and rightly so, as the data they require from their customers can quite literally make or break them! Again, it’s just a question of balance, the value exchange and ultimately building trust. Extra functionality may be needed for recording investment conversations and transactions under MiFiD II, but due diligence during the prospecting phase of supplier selection should easily encompass such requirements.

Once you have your CRM and all the customer touchpoints to collect data securely installed, you will need to ensure you have a central repository of customer consents and preferences… a single source of the truth. Without this you lay yourselves bare to the possibility for falling foul of the regulators. Imagine you have a customer who has opted out of further postal communications by calling into branch, but that hasn’t been relayed to corporate marketing. They may continue to receive communication they no longer require. This is a simple example but, within FSIs, communications often contain valuable customer data that can be diverted resulting in fraud or identity theft.

Loss of Customer Data Control Anxiety

63% of Banks and 38% of Fin Techs are worried about the loss of control of customer data in open banking. But, as we have said before, we believe the customer should control their own personal data, so relinquishing control of it to them is a positive approach.

The Datastax survey [2] found that most adults around the world are willing to trade money or personal data for better customer experience. 66% of respondents said that personalisation is somewhat or very important to their experience in Banking.

To continue to achieve, and exceed, revenue and profit goals, you need to implement customer centric objectives and behaviours. Being customer centric and providing personalisation doesn’t need to mean a loss of customer data control, far from it. When implemented correctly, you should find yourselves with more data and more insight.

The latest data protection regulations dictate that customers must provide consent for their data to be processed. By being transparent about the uses of data, it will benefit both parties and demonstrate to your customers how much you value the trust they place in you.

Ensure all staff are trained to understand the importance of the regulations, can operate the systems that record consent and audit of any changes, all in real time. Again, this should be fed back to the central repository for the single view of the truth.

Being customer centric and having a system to manage consent can increase the level of granularity in your opt-in/opt-outs. You will no longer need to have a blanket unsubscribe action. You can split the communications down to channel, product or service level, so customers only add or remove themselves from relevant subjects. For example, instead of opting out of all emails, they can choose to stop emails just for ISAs and loans, but keep investments, shares, pensions and savings accounts.

Compliance and Regulation Changes

Financial regulations are in place to provide market confidence, contribute to the protection and enhancement of the financial system, and protect your customers.

New regulation has had an impact across the globe. GDPR, PECR, MiFiD II and CCPA all came in quick succession, with regulators and governments responding to the changing needs of this digital age.

Regulatory activities will drive open initiatives across the World to affect an extensive geographical footprint in the years to come. In this vibrant ecosystem, it is crucial that FSIs continuously evaluate the external, and internal, circumstances to develop their Open X plan, with the objective to gain maximum profit potential, whilst maintaining outstanding customer satisfaction.

And we all recognise change is a good thing, right? The regulatory landscape has shifted on its axis, bringing multiple suppliers to the market, with specialist knowledge and expertise, taking the weight out of the compliance heavy lifting. With this comes improvements to customer experience through product innovation and standardisation of API’s which allow sharing, within regulation, to prevent fraud, increase speed to market, improve interoperability and scalability.

So, make use of these experts and free yourselves to continue to do what you do best. Which brings us to the next point.

Outsourcing to partners

Only 26% of bank executives and 43% of Fin Tech’s said they have found the right partner; this can only mean we are not ready for open banking.

But now is prime time to leverage the volume of data and tech available. To optimise systems and processes and collaborate with the ecosystem to modernise FSI’s.

Rather than DIY to build systems internally, which takes away valuable resource from other projects, innovate through partners who have researched the requirements of customers and can provide out of the box or bespoke solutions that can be integrated into your existing systems.

There are a multitude of partners with solutions ready to:

• Expand distribution channels
• Promote new products and services
• Improve the customer experience
• Increase personalisation

To make sure you can reach out to these partners, you need the right team in place, with the right skill set. The World FinTech Report highlights three strategic roles necessary for FSI’s to evolve as part of Open X:

• Suppliers – to develop products and services
• Aggregators – to amass products and services from the marketplace and distribute them through internal channels, holding onto customer relationships;
• Orchestrators – to act as market connectors and coordinators, facilitating partner interactions.

This will address challenges to meet the unique demands of the customer. Now we are firmly entrenched in the digital age, you need to be ready for the long game, and not expect a quick fix.

FSIs need to work collectively with partners to overcome the worries and barriers surrounding open architecture adoption and implementation.

Differing cultural mindsets between partners and firms

Building a close working relationship is a key component of any partnership. Understanding the challenges faced by the organisation is key and should be integral across all points of contact.

If a partner is as good as their word, they will ingrain themselves as part of an FSI’s team – an extension of the departments involved in the project and feel the highs and lows as if their own.

There should not be a difference between cultures, if the partner places themselves in the mindset of the FSI to achieve the required outcome. Whether this is monetising applications through subscriptions or access fees, providing insights and data analysis for a 360 customer view or managing consent for customer data use[3], all partners need to understand the FSI’s goal to improve the customer experience and become truly customer centric, ready for Open X.

To achieve all this – you need better information, for which you need data … that has to be compliant.

Please take a moment to watch this quick animation to see how easily Consentric can bring all this together.

And, reserve your place now at our limited attendee breakfast briefings to discuss these topics, and more, which will take place in London during September and October.

[1] https://fintechworldreport.com/

[2] https://www.datastax.com/resources/infographic/me-culture-survey-reveals-nuances-of-customer-preferences-around-speed-and-personalization

[3] https://consentric.io/