Analytics is a technology that helps all industries, including banking and finance, to support data-driven decisions i.e. to use the power of factual data for effective decision making. They act as a catalyst to support business acumen, particularly in the world of banking, for the industry has the richest amount of customer data. Also, banks have been the leaders in using the capabilities of analytics across the globe, considering the benefits it drives for the business.
An Interesting Stat
The Banking (or rather Financial) Analytics market will be evaluated at a total worth of $6.65 billion by 2018.
Why do banks maintain or have more data than that of other industries? It is because of:
- A large number of customers, their personal data, the number of transactions they perform and more
- The requirements or mandates from the regulators (e.g. KYC norms etc.)
But, the questions that need to be answered are:
- Whether banks realise the potential of using Analytics in Banking?
- Do they really wish to avail the opportunities that analytics offer, particularly in developing countries like India?
- Do they have enough skills and expertise to use it?
While the debate continues, check out this graph highlighting how larger financial institutions have more analytics capabilities…
Image source: The Financial Brand
Reasons why Banks need to start using Customer Analytics
1. It is the new mandate
In the observance of low interest rates, rising compliance and slow-growing economy, the revenues continue to remain moderate. Customer analytics can help explore new profitable areas. It can help target customer segments based on their demands, promote products/services across multiple platforms and attract customer behaviours through reward programs.
2. It is easy-to-use, easy-to-start
Unlike the older times, customer analytics is no longer restricted to use by the specialists. It is accessible by business leaders and markets to expand their data sources, identify improvements in solutions based on constructive feedback and more.
3. It is customer-centric
It helps customers to explore financial facilities online, offline, social and mobile channels while giving them real-time updates on their finances. This thus maximises the effectiveness in banking, making customers more empowered and satisfied than ever.
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