Differentiation through data
Diane Stuckey | Director, IBS Business Unit Manager, FIS
August 16, 2021
As banking becomes more commoditized, differentiation becomes more critical. Regional and community banks can separate from the pack by specializing on certain segments of the market. The question is where to focus and how to specialize at scale. The answer is data.
Right now, many banks are sitting on a goldmine of untapped capital: customer data. The power of data at a strategic level can yield transformative growth and revolutionize the customer banking experience. Unfortunately, this level of data-driven strategy has remained largely unattainable to all but the biggest banks in the industry. For regional and mid-sized banks, it can be a challenge even knowing where to begin.
Transforming data into meaningful information
Those who begin building out a data strategy may soon stumble into serious obstacles. Each customer leaves a massive trail of valuable behavioral data. Challenges arise in how to effectively organize and transform these mountains of data into meaningful information. Without adequate technology and expertise, “data wrangling” (gathering, cleaning, standardizing, updating, and connecting data from disparate sources) can become overwhelming, and an obstacle to gaining meaningful information.
IBS Business Intelligence (formerly referred to as the Business Intelligence Center – BIC) provides a strong foundation to a bank’s data supply chain. With the widest breadth of data available from FIS designed specifically for banks, IBS Business Intelligence includes not only IBS core data, but other key sources of customer financial activity, including credit cards, and channel data, such as online and mobile banking. In all, IBS Business Intelligence provides over 60,000 fields of information – more than 350 terabytes. Ultimately, IBS Business Intelligence provides a comprehensive view of customers and their financial behaviors so banks can focus on data strategy.
Know your customers
Once the data is “wrangled,” the next step is determining a strategic focus. To do this, banks must segment their customers into meaningful groups. Wealth, Mortgages, Small Business, Commercial, Millennials, or Seniors are all viable segments; however, a bank cannot and should not be all things to all people, as all customers are not equal. Some customer segments may even lose money. Data can help banks navigate these segments to identify which groups are most profitable for them, which offer the greatest upside, and which should be left behind.
Data also allows banks to take a closer look at individual customers within each segment. Customers with seemingly identical demographics may be quite different upon closer inspection. Data empowers banks to identify and stratify their most valuable customers and determine which will drive long-term growth. From there, banks can create specialized services and personalized customer outreach based on data.
Solutions like IBS Business Intelligence help to level the playing field for regional and community banks. By allowing an experienced fintech to perform the heavy lifting of “data wrangling,” banks can focus on developing and executing a differentiation strategy based on engaging their most valuable customers.