Authors
In the current and rapidly developing banking and financial services industry (BFSI), one of the main priorities for every company is to focus on the customer. The banks are thus under a lot of pressure to provide efficient and tailored services while at the same time adhering to very strict regulations. In this context, the Customer Data Platform for banking has been identified as a solution that can help organize customer data, and, thus, support decision-making and business development.
In this blog, the author will define what a Customer Data Platform (CDP) in banking is, the advantages of its application and the most applicable use cases for banks and other financial institutions.
Customer Data Platform (CDP) is a technology stack that is responsible for the integration of the customer data originated from various sources within the organization. While traditional data warehouses or CRM systems offer data storage and management, CDP focuses on compiling data about individual customers from website visits, purchases, and communications with customer service representatives, among others.
In the context of banking, a CDP acts as the key infrastructure for data management, marketing, and customer service, changing the approach of banks in dealing with the customers.
To understand the concept of CDP, it is crucial to know the overall benefits that a CDP offers to the banking sector and the BFSI industry in particular:
Unified Customer View: A CDP makes it possible for banks to build a single customer profile that includes data from all the systems used in the bank including the core banking systems, CRM, marketing platforms among others. This is useful in giving a bigger and clearer picture regarding the customer journey.
Personalized Marketing: Through the use of integrated customer information, it becomes easy for the banks to offer targeted offers and recommendations that are likely to be of interest to their customers. This in turn increases the level of engagement and loyalty of the customers.
Data-Driven Decision Making: A CDP is a system that is capable of capturing data in real time and thus enable the banks to make intelligent decisions regarding marketing, sales, customer service and risk management.
Enhanced Customer Experience: It will enable the banks to provide better services to the customers based on the CDPs to answer the customers’ queries faster and provide better services in the digital and traditional channels.
Compliance and Security: When implemented properly, a CDP can assist banks in better controlling customer information and meeting legal requirements concerning data privacy including the GDPR, the CCPA, and other local regulations.
1. In this light, one of the major applications of a CDP in banking is in providing personalized product recommendations.
A CDP in banking enables financial institutions to capture customer data and understand the preferences of each customer. Based on this information, banks can come up with financial solutions such as loans, credit cards, investment plans, and savings accounts that best suit the customer. For example; a bank may use customer’s transaction history to provide a targeted loan product or inform the customer about a new credit card rewards.
Use Case Example: For example, a bank observes that a particular customer is making transactions with merchants based outside the country. By employing a CDP, the bank could design a credit card with no hidden charges on the foreign transaction, or advise the customer on the best way to exchange currencies at a favourable rate.
2. Improved Customer Retention
This is especially so in the highly competitive BFIS sector where it is as crucial to retain customers as to get new ones. In the banking and financial sector, for instance, a Customer Data Platform allows banks to monitor customers’ behavior and determine their level of satisfaction or likelihood of leaving. Thus, with a comprehensive view of the customer, it is possible to prevent a deterioration of the relationship with a high-potential customer and to offer him or her an incentive or additional service.
Use Case Example: The customer begins to show some discontent by minimizing his or her activities in the account. The marketing team in the bank can send out a tailored offer to the customer such as free service or low interest rate to discourage the customer from cancelling his or her membership through the CDP.
3. Identification of better cross-selling and up-selling prospects.
A CDP for banking makes it possible for the financial institutions to sell other products to the customers based on the understanding of the customer’s behavior. Hence through the use of the transactional and engagement data, banks are able to come up with targeted offers that may be of benefit to the customers for other products.
Use Case Example: For instance, after a customer has opened a savings account, the bank can target him or her for other financial products such as a mortgage or an investment through the insights available from the CDP based on the customer’s financial status.
4. Data-Driven Risk Assessment
There are many types of risks that are involved in banking including credit and operational risks. In banking, a CDP allows financial institutions to use historical and real-time information to estimate the risk in a better way. Through linking of the transaction data, customer behaviour and other external factors, banks are able to enhance their lending decisions and identify fraud.
Use Case Example: A bank employs its CDP to quantitatively analyse customers’ past loan repayments, spending patterns, and other financial data in order to provide a more accurate credit scoring. This in turn enables the bank to make better risk assessment of the borrowers and reduce instances of defaults.
5. Omnichannel Customer Engagement
Customers of the modern world have numerous options to communicate with the bank, including mobile applications, websites, call centers and bricks-and-mortar stores. In banking, a CDP consolidates data from all these touchpoints, and thus the company gains a unified vision of the customer journey. This in turn allows the financial institutions to provide a smooth and connected experience no matter the channel being used.
Use Case Example: The customer initiates a loan application process through the bank’s website but drops off in the middle of the process. By using a CDP, the bank can reengage the customer though an automated message, for instance, an email or SMS, with a personalized message to complete the application or to seek help from the bank’s customer service.
6. Improved Compliance and Reporting
It is essential for every organization particularly those in the BFSI sector to meet various compliance requirements including the GDPR, PCI-DSS and AML. In the context of financial services, a CDP allows banks to keep a proper record of customer data as well as their interactions, which facilitates compliance with data and financial regulations. It helps in tracking consent, handling customer preferences and preparing reports for the compliance audits.
Use Case Example: The marketing communication of a bank is managed using its CDP and the customers’ consent regarding such communication is also monitored as per the guidelines of GDPR. Also, the platform assists in creation of real time reports for detecting and avoiding of the fraud.
7. Customer Service Enhancement
Customer service teams are benefited by a CDP since the system provides a complete view of each customer’s history, preferences, and interactions. This results to increased efficiency of the support and makes it easier for the representatives to come up with better solutions to customers’ problems.
Use Case Example: A customer has a complaint and complains to the bank’s support team about a particular transaction made on the customer’s account. The customer service executive, with the help of CDP, is able to view the customer’s account history and all the previous communications made with the bank, and hence provide a better resolution to the customer’s query.
Conclusion
DWAO can help the banks in the implementation and enhancement of Customer Data Platforms (CDPs) by providing services that manage and synthesize customer information from multiple channels. With the help of DWAO’s knowledge, the solutions that we provide to the financial institutions help them to effectively manage data, generate targeted marketing strategies, increase risk appraisal, and offer efficient customer relations services. We also provide seamless integration with the current banking platforms so that banks can use customer information to enhance the loyalty, retention, and adherence to set regulations.
As the banking and other Financial Services Integrated (BFSI) industries keep on developing, it is crucial for them to adopt a Customer Data Platform (CDP) in banking to remain competitive. This paper has demonstrated that – if engaged and acted on effectively – customer data can revolutionalize the way that banks engage with their customers, and enhance efficiency and customer loyalty scores.
Hence it is imperative for the financial organizations to implement a CDP for banking to optimize on the benefits of the data they possess and provide the best customer experience to boost revenue. Whether it is to improve Risk Management, provide tailored products, or increase Compliance, a CDP is the new strategy that every bank must consider.
To remain relevant in the current world where most activities are being conducted online, banks that offer their services through various channels should make a CDP a part of their strategy.