The management and governance of customer information has become one of the most critical success factors for today’s strategic banking initiatives.
Whether their priorities involve increasing deposits and wallet share, improving the customer experience, transforming digital and mobile offerings, innovating through machine learning and artificial intelligence, or meeting regulatory compliance and privacy requirements, successful financial services organizations are finding that well-managed and well-governed customer information often is the first and most critical ingredient.
Today’s changing landscape
Because financial services are so integral to virtually all other forms of commerce, the banking industry is sensitive to general economic trends and developments. In both good times and downturns, accurate and timely customer information is always an essential component of successful bank operations.
Looking beyond the immediate economic circumstances, several longer-term trends are having a lasting impact on the banking industry. Each of these macrotrends has a direct impact on the ways that banks maintain and use customer data:
- Changing customer expectations. The banking industry can learn from the examples of leading technology companies, which often register higher levels of customer loyalty than conventional industries typically achieve. Indeed, many technology innovators are now direct competitors, offering customers ways to blend their digital and physical experiences. This ability to integrate digital and in-person interactions and erase the lines between their online, mobile, and in-person experiences is one of the features many of today’s customers find most appealing about fintech competitors. Clearly, customer retention will be higher at banks that interact with customers in ways that reflect their evolving preferences.
- Margin pressures and macroeconomic issues. Margin pressures are a constant in the banking industry, but they are being exacerbated by macroeconomic issues. Even before the financial system encountered major new stresses, some economists were expressing concerns that the long-term economic trends were showing signs of an impending slowdown.
- Rapid advances in digital technology. In response to customer expectations for simple and immediate digital interactions, the banking industry is rapidly deploying strategies that rely on the newest data science technologies such as artificial intelligence, machine learning, and robotic process automation. Such advances rely on complete and accurate customer data for their models, but many bank chief information officers (CIOs) commonly cite the limitations of their legacy systems as significant barriers to adoption of these powerful tools.
Recognizing the customer data challenge
As banks develop and adapt their strategies for addressing these issues, having ready access to complete, accurate, and timely customer data will be integral to their efforts. Yet many banks recognize they still have significant work to do in this area.
For example, when a large group of bank executives participating in a recent Crowe webinar was asked to evaluate their banks’ ability to understand their customer relationships, only one in five (19.7%) said their data was accessible, well-managed, and immediately available to their customer-facing resources (Exhibit 1).