Data can drive loyalty in consumer banking
In every industry, brands have found themselves operating in a data economy driven by an explosion of customer information through a growing number of channels. In the banking industry in particular, there are other new challenges - such as the UK's government-led drive to make switching banks easier - that can be addressed only by the smarter use of all that data, according to Gianluca Carrera, chief operating officer for UK-based data monetisation firm, Reward.
From social media and email to in-store and traditional mail, the consumer has never had so many options when it comes to how they interact with a brand. The way that brands interact with the consumer is under greater scrutiny than ever with an increased expectation for personalised and streamlined interactions that contain meaningful content delivered seamlessly across multiple devices.
This reality is one that many industries are struggling with, and consumer banking is one such sector that has seen its relationship with the consumer evolve. It has often been said in the past that consumers were more likely to get divorced than switch their bank. However, the introduction of legislation that streamlines the process of changing banks means that the industry now needs to work harder to retain customers.
As a result, there has been a deluge of offers and schemes to entice consumers to switch. But the savvy banks are those that look to not only understand their target audience but leverage the assets at their disposal in order to offer value that retains existing customers as well as attracting new ones. Both Big Data and Card-Linked Offers are cornerstones in fostering the customer loyalty that banks covet.
Making full use of data For banks there is a real opportunity to prosper in this environment due to the reams of consumer data that can be analysed and then applied to deliver insights that inform targeted messaging. However, the challenge is to ensure any offer is delivered on robust insights as the customers understand the potential of data analysis and therefore expect more relevant and targeted offers.
From here financial institutions can begin to incentivise their services and deliver offers that give true value to the recipient and enhance their relationship with the bank. This has been seen in the introduction of cashback schemes such as RBS Group's Cashback Plus, which allows cardholders to earn value back on purchases using their debit card with participating retailers. These schemes not only encourage consumers to spend with the merchants involved but also to make more purchases using their debit cards. Subsequently, this increases the volume of information that the bank has access to and enhances the level of personalised incentives that can be offered.
These Card-Linked Offers (CLOs) provide unlimited potential in mapping out the customer journey. This information is often hidden within multiple layers of existing data, which provides banks with a real challenge as they look to realise the potential to influence positive consumer behaviour and enhance loyalty.
The importance of channel and frequency By leveraging the power of CLOs and the data it provides, banks have the opportunity to understand how the consumer uses the different channels at their disposal alongside their openness to the frequency with offers are delivered. What's more it also allows the bank to evaluate their audience's receptiveness to each prospective offer.
For instance, a constant barrage of different or, even worse, irrelevant offers is likely to evoke a feeling of fatigue in the consumer leaving a sense of indifference to the offer and reducing the impetus to act, and derive true value from their interaction with the bank. However, a coalition loyalty scheme like Cashback Plus allows all the stakeholders to deliver relevant, hyper-personalised offers that prevent this issue, turning a risk into an opportunity for the bank to become more engaging and relevant for its customers.
Every bank needs to use and analyse the data at its disposal to ensure relevant offers are available through the right channel using a seamless redemption process with deals from high-street brands that will appeal to that individual. The economic advantage that these offers then provide to all stakeholders will have a positive impact on consumer behaviour, their relationship with banking products, and hence the overall banking experience.