As a consumer, there is no greater frustration than when a business does not recognize or communicate with me effectively, especially if I have been loyal for years. When a business fails to understand the what, how and why of my interactions and transactions, churn is inevitable. How many times have you scratched your head on irrelevant marketing material? I continue to get warranty information on vehicles where my lease has been expired for several years. Sound familiar?
As consumers, we develop a variety of business relationships for goods and services which range from extremely loyal to becoming a lapsed customer. No matter the stage of relationship, we want to be talked to and not at. In the age of improving and enhancing customer and user experiences, the need for personalization is of the utmost importance. As Financial Institutions compete against Fintech disrupters, digital transformation is a necessity and customer interaction with a meaningful and relevant engagement model is even more critical.
Interaction and Engagement Rapidly Accelerate
In a 2020 Q3 earnings call, Microsoft CEO Satya Nadella summed up the new reality that has been put upon us: “We’ve seen two years of digital transformation in 2 months.” In fact, the pandemic has accelerated the need to retool legacy infrastructure and drive toward modernization. Salesforce conducted a study in 2019 (2019 State of the Customer survey), pre-pandemic, and found that roughly 80% of Millennials/Gen Z’s were more likely to use multiple channels and devices to purchase goods and services… not surprising, Gen Xer’s are not far behind. Baby boomers were significantly lower: only 60-65% of Boomers were likely to use multiple channels and devices. As we all know the pandemic changed that, accelerating the use and adoption of omni-channel and omni-device purchasing exponentially for ALL generational categories.
This exponential growth in mobile and online purchase activity is the tipping point for customer engagement and the race is on for financial institutions to build out an effective and efficient Customer Data Platform (CDP). According to Markets & Markets Global Market Forecast, the global CDP market size is expected to grow from $2.4B in 2020 to $10.3B in 2025 at a CAGR of 34% during the forecast period.
“It’s Time to Take Down the Siloes!
The concept of a CDP is not entirely new. Core Banking Platforms, Enterprise Data Warehouses, CRMs and Marketing Automation systems have provided organizations much needed value but have been siloed efforts in the pursuit of a truly interactive customer engagement platform. The good news is that a CDP can be integrated into many of the consumer-driven applications where banks and credit unions already have substantial investments. The investment and ROI into CDP cuts across the enterprise and is not just limited to marketing or any other single area of the institution. However, with the increased pressure on Marketing to drive efficiency and effectiveness, a CDP will assist in optimizing the bank’s advertising and marketing spend through advanced analytics and personalization.
As you begin to consider how you move forward into the new normal, consider the following key principles of an effective CDP; these principles were requirements for the FIS Ethos™ Engagement Platform:
- Data unification/identity Resolution – Disparate data resources need to be consolidated and normalized to develop a single view of the customer. DDA, Credit, Mortgage, Auto Finance, Call Center and Wealth, all areas of the bank that were siloed, now need to be consolidated and allow for greater customer insights from the context of all channels and data source.
- Real-time sophistication/customer DNA – Data sources coming from both batch and accurate real-time feeds are central to digitally transforming the organization.
- Audience selection and criteria – Once a single view of the customer is established, audiences, segmentation and profiling are formed through Business Intelligence and Analytics.
- Decisioning engine AI/ML – A key differentiator in a true CDP is the ability to create predictive models that will drive consumer behavior. Customer Clustering and Look-a-Like models are created and the AI/ML engine provides a continuous feedback loop by constantly improving its predictive power.
- Offer recommendation – The AI/ML decisioning engine is the key to personalization and driving real-time campaigns using Next Best Offer (NBO) algorithms delivering the right message in the right medium at the right time to the right audience.
- Customer journey analytics – The orchestration of a customer’s product journeys within the bank are crucial in understanding NBO. Journey analytics determine where you and your customer are in that individual’s lifecycle.
- Real-time interaction management – The continuous feedback loop of response or non-response, click-through behavior and purchase activity will improve the predictive power and drive future NBOs. This will drive cross-sell activity and disrupt competitive threats delivering tremendous value to the bank.
If you’d like to tap into FIS CDP expertise to understand how you can digitally transform your siloed data, please contact John Melucci @firstname.lastname@example.org.