Digital technology is now shaping our daily lives. A plethora of data about us is kept when we buy, obtain information, or simply peruse the Internet. The promise of what some refer to as the “black gold of the digital economy,” data, has been recognized by the Fintech titans. Among this wealth of data is the possibility of a more personalized and customizable bank for users. When it comes to money, we don’t want to be just another bank account number. But, is our bank making good use of data? Initiatives are proliferating.
Mr.Nobody, a science fiction film directed by Jaco Van Dormael, comes to mind. This was the story of a mortal in an immortal planet, attempting to piece together the fragments of his past life in a society where it is now reasonable to remember everything. Being Mr. Nobody appears to be difficult in real life. Our DNA is slowly permeating our daily lives: social media, internet shopping, internet study… Playing the job of a covert agent is becoming more difficult as we learn that an enormous quantity of information is being collected about us on a daily basis. But what should we do with it all?
The banking industry is currently experiencing a serious identity crisis. The development of Fintechs has made it difficult for yesterday’s banks to compete. Shocked by the economic crisis, the latter want to reinvent themselves as today’s banks by drawing inspiration from newcomers to finance. Banks have decided to reformulate their offerings in a mobile format in response to customer demand for more freed banking services and improved financial management. They do so using well-known internet banks, which are gaining popularity. Online payments, balance checks on your smartphone…
Finance 2.0 is the process of learning or relearning information about your customers behind a screen using new data. This move upends the traditional bank/customer connection, with branch appointments and bank advisors with recognized faces. It is a structural shift that opens the door to the possibility of new value creation for banks through more personalized financial services. According to a poll conducted by Infosys and Efma, worldwide banks are already prepared to deploy intelligent Big Data utilization.
Marketing with data or truly personalized financial services?
In response to growing customer expectations for an efficient and direct bank, an increasing number of consumers are turning to neo-banks. Thanks to the ultra-fast registration given by these pocket banks, the days of feeling continually controlled by your bank are over.
This is also due to appealing free fundamental services, such as an easy-to-personalize bank card. These banks appear to provide a tailored service, such as the elimination of commissions on foreign currency withdrawals and payments, as well as comprehensive travel insurance for a low fee. However, these ostensibly tailored services are still based on simply watching new habits rather than making actual use of data.
We must admit that banks are moving slowly and taking protections against clients who are hesitant to share their personal information. Fears center on these banks’ still-too-marketing-centric use rather than a genuine desire to deliver the optimal product to the consumer. With access to their physical location and other information, it is considerably easier for digital banks to track the most popular consumer transactions. On the surface, it appears that defining typical user profiles would be easier, yet there are still numerous challenges to overcome.
According to studies, the rejection of using such data is still high. A basic notification confirming that your bank is aware of what you’re doing, such as a change of address, can still be effective. A simple notification confirming that your bank is aware of what you’re doing, such as a change of address, can nonetheless be interpreted as a breach of privacy. The regulatory framework on the matter is still quite hazy, and the scale of use of this data by banks is not easily quantifiable. There is a lack of foresight and structure.
Is a move in the direction of efficient and ethical data even possible?
In 2018, Olivier Gavalda, regional director of Crédit Agricole in France, stated: “The breakthrough is in the shift in scale: these digital applications generate a massive amount of complex data, and this machine power enables real-time analysis. The true difference is in the finesse of the results, predictive analytics, recognition technologies, and so on.” To attain a degree of performance in the use of data by our banks, and, more importantly, to use data without intruding into personal life, we must have control over this vastness. The DSP2 directive went into effect in 2018.
This is a European Union project that seeks tighter supervision of online monetary transactions by making payments more safe, giving the consumer more security. It is referred to as a “cheaper, safer, and more innovative payment solution.” The directive establishes the groundwork for further research into internet banking in order to provide more ethical and transparent services: “This legislative act is another step toward the formation of an EU digital single market.” It would promote the development of innovative online and mobile payment methods, boosting the economy and growth.”
There are already examples of banks using data intelligently all across the world. In Australia, for example, CommBank offers to assist small merchants such as florists and bakers by providing them with critical data to better understand their clients. This is a novel approach to assisting entrepreneurs and one of the bank’s aims. The data also allows for a more accurate assessment of bank customers’ financial profiles in order to determine their ability to repay a loan.
Data is also an excellent tool for Fintechs, who have been chastised for a lack of after-sales service and advisors willing to listen to their customers’ issues. HP, for example, has worked to improve the productivity of an American bank’s call center. By providing a solid overview of the customer’s behavior prior to the contact, the customer saves time and can more quickly pinpoint the cause of the problem.
“If customers contact their bank through smartphone or computer, the credit proposition will be sent via email rather than postal mail. As a result, the bank’s conversion rate for marketing efforts has grown by 30% “said Philippe Bessis, an HP business developer. The list is lengthy, but it marks a promising start to the use of data in the banking and finance industries.
To learn more about which partners are ideal for your business or organisation to work with and how you can make the best use of big data in Europe for your company, please contact me and let’s have a conversation about it.
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