In the financial services sector, enabling digital payments and adopting multichannel approaches are two trends that have led to exponential growth in the number of transactions. Such growth has produced two important consequences: an increase in online and offline sales and generation of an astronomical amount of data, the so-called Big Data in banking. Managing this data in the most efficient way creates an impact on the economy every day. In fact, data-driven organizations are 23 times more likely to acquire customers, 6 times more likely to retain those customers, and 19 times more likely to be profitable (Source: McKinsey Global).
With the exponential increase in the number of electronic records, banks and fintechs have access to huge streams of data, both transactional and non-transactional, related to customer demographics, habits, and behaviors, and they now have the ability to analyze this data to derive business insights, optimize processes, and most importantly, improve the customer experience.
What is Big Data in banking?
Big Data represents an asset across all industries. The most frequently cited definition is from Gartner: Big data “is high-volume, high-velocity and/or high-variety information assets that demand cost-effective, innovative forms of information processing that enable enhanced insight, decision making, and process automation.”
By the expression “Big Data in banking” we are talking about a much broader phenomenon: the set of all the activities in the financial products market that generate a digital footprint. Let’s pause for a moment to elaborate on how the distinctive qualities of Big Data—variety, volume, and velocity—work in the case of banking, and to introduce a fourth pillar, value, which translates data analysis and management operations into a company’s business results.
The four pillars of Big Data in banking: variety, volume, velocity and value
Big Data, literally “big data streams,” can be described through four key attributes: variety, volume, velocity, and value.
- Variety: the different types of data being processed each moment. For banks, we’re talking about a wide range of data: from transaction details to credit scores to risk assessment reports and more.
- Volume: the space required to store the data. In the case of financial institutions, from international lending giants to the smallest local start-ups, the data generated and stored each day can be quantified in terabytes.
- Velocity: the speed with which new data is added to existing data in the database. To have an idea of the average speed, just consider that banks handle thousands of transactions each day.
- Value: for banks, this corresponds to the real-time application of the results of Big Data analysis for business decisions.
Now, let’s put this into context and back to reality that we experience on a daily basis. Today, virtually every time we come into contact with our bank, we interact with it through data-driven banking services.
For industry players, this means having the opportunity to deepen their knowledge of customers to a degree that was simply unattainable before. Credit card history, branch visits, transaction history, purchase records, subscriptions, but also web and social media interactions and all qualitative and unstructured information related to preferences, needs, recurring behaviors: Big Data contains and—if properly interrogated—expresses an invaluable mine of information.
In today’s ecosystem, Big Data in banking is an indispensable resource. From Big Data, industry players can develop targeted actions through which they can intervene in both business structure and processes and external communications. The benefits of employing Big Data can be seen throughout the company, from marketing and sales departments to the administration, from customer service to the human resources department.
What is the purpose of Big Data in banking?
To answer this question, we need to focus on two aspects of the bank-customer relationship, first asking what customers want and then how, by employing Big Data, banks respond to their demands.
People want their bank to offer realistic and convenient solutions. They expect faster and more streamlined processes (for example, in the case of the classic loan application to buy a house); personalized advice; correct, complete, and timely information on useful and relevant topics (because customers want to receive relevant products and services, they are generally willing to share their data).
In general, the use of Big Data helps put banks in a position to meet these expectations. Data can be leveraged through advanced analytics and by using state-of-the-art technologies such as artificial intelligence and machine learning on at least three key focus areas:
- Personalization and convenience. In the case of loan applications, Big Data enables banks to speed up checks on possible credit risks (through faster responses); Big data provides a framework to understand which modes customers prefer to interact with the bank. Thanks to the available information assets, services can also be customized across all the company’s channels.
- Protection. Big Data helps banks detect possible fraud before irreparable damage occurs, provide support in monitoring suspicious transactions, and increase the security of investments and privacy of customer accounts.
- Create relevant offers. With Big Data, banks can anticipate customers’ financial goals and develop proposals that are in line with them, help advisors and salespeople tune in to each customer, and offer specific discounts tailored to meet personal needs and interests.
Banking organizations are learning how to use Big Data effectively to increase cybersecurity, enhance customer retention processes, create targeted communications and useful content for increasingly profiled targets, and design personalized and innovative offerings. The most widely adopted strategies that are proving to be effective are those that:
- effectively segment customers based on more accurate profiles;
- include cross-selling and upselling initiatives;
- improve service delivery based on feedback;
- identify spending patterns and formulate customized offers;
- assess risk against compliance standards;
- produce timely reports to help manage and prevent fraud;
- identify the main channels where customers are making transactions (for example: credit card, debit card, or ATM withdrawals).
Since 2008, Big Data analytics in banking have enjoyed increasing interest and popularity. As banks began to digitize their operational processes, they also needed specific tools to monitor, track, and interpret the data and to build actions and initiatives from the knowledge gained through the processed information. As technology has evolved, overall performance has also improved, positively impacting revenue, increasing profitability, and propelling the banking industry into a further cycle of growth.
Big Data in banking: a valuable resource for building more engaging customer experiences
Being able to govern Big Data in banking and unlocking its potential makes it possible for banks to gain a competitive advantage over the competition. With so many financial institutions vying for attention and trust in a complex and constantly evolving market, it’s difficult for customers to decide which organization to trust. The quality of the customer experience then becomes a factor of critical importance .
Employing Big Data to develop personalized marketing: communication from Doxee
Big Data—different types of information that come, we have seen, from a multitude of different sources—is crucial for developing personalized marketing projects. If an analysis of transactions that have already taken place can provide insight into buying and consumption patterns, analysis of customer behavior on social media returns the sentiment and helps banks enrich their overall assessment (e.g., of credit risk) and offer products that may actually spark interest.
Big Data is crucial for the development of communication that can convey relevant and informative messages and at the same time that supports full interactivity, equipping banks with the tools needed to bring more open and vital conversation spaces to life. This is the communication enabled by Doxee, which, through its product lines designed to support organizations on their digital transformation journeys, is helping establish the culture of data at all corporate levels.
Doxee paperless experience: digital transformation starts with document dematerialization
Doxee paperless experience is the solution that meets organizations’ needs for the dematerialization of processes in tax and documents related to Italian and European compliance and offers complete coverage of digital tax and document processes, allowing seamless integration with existing tools and procedures. The products in Doxee’s paperless experience line are continuously updated with RegTech regulations, and they are delivered as services and managed directly by Doxee accredited specialists. These products represent an excellent starting point for initiating and accelerating business digitization processes.
Doxee document experience: the first cloud-based product for document process management
Doxee document experience not only advances an entirely customer-centric technology trend, it also promotes a real shift in business perspective: it extracts value from data to transform it into communications and relationships. Thanks to the document experience line, which is dedicated to the creation, multichannel distribution, and archiving of communications, it becomes possible to implement a Customer Communications Management (CCM) strategy that is aimed at the digital world, with a view toward personalization and multichannel. Through its cloud service model, Doxee processes companies’ data to optimize their document production and distribution processes, and most importantly, helps companies transform every transactional document into an excellent tool through which to enhance customer relationships.
Doxee interactive experience: from Big Data to customer experience in banking
Doxee interactive experience is the product line that enhances customer data to achieve a revolutionary digital customer experience through personalized communications. The interactive experience products are Doxee Pvideo® and Doxee Pweb®:
- Doxee Pvideo®: personalized and interactive videos that transform customer data into personalized and engaging videos. With Doxee Pvideos, you can give customers the information, products, and offers they are most interested in. With interactive features and integrated analytics, Doxee Pvideo® helps companies get to know their customers and support them along their customer journey, delivering an interactive customer experience that is effective, multichannel, and ensures ultra-high conversion rates.
- Doxee Pweb®: customized micro-sites that revolutionize the way complex data, offers, and information are communicated by transforming each piece of content into dynamic, interactive sites dedicated to each of the bank’s customers. Thanks to Doxee Pweb, which leverages all available Big Data, customers are guided to discover the services and products they really need. Doxee Pweb® is particularly useful for developing upselling and cross-selling programs and for transforming transactional documents and statements into interactive applications.
If Big Data in banking allows you to know as much as possible about your target audience and at the same time to look inside your business with a precision, depth, and breadth of analysis that was absolutely unthinkable before, Big Data is also the main lever of a digital communication strategy. Through the technologies developed by Doxee, it is possible to manage this immense wealth of information, enriching, sorting, and optimizing data to maximize the effectiveness of communications.
To avoid being overwhelmed by the amount of information and take advantage of the opportunities that digitization offers to build more engaging customer experiences, the best way is to choose qualified and experienced partners, such as Doxee. Only through personalized communication will it be possible to establish and maintain truly valuable relationships over time.