Using Data to Drive Consumer Financial Wellness
May 17, 2023 | 2 min read
Data continues to be one of the most valuable resources financial institutions of all types have available to them. And, yet, it is the most underused and, sometimes, undervalued asset. This is perhaps the biggest mistake financial institutions are making right now. By not tapping into what data can provide, credit unions, fintech companies, and traditional banks are missing key opportunities to improve customer relations and boost bottom line figures.
Data Delusions: Common Myths Hindering Growth
In today’s banking industry, new competition continues to lure consumers. Easier, faster, and more affordable banking is tempting consumers to move away from the traditional credit union and bank and closer to fintech solutions. Add to this there is a growing number of institutions tightening their belts as they try (often without success) to boost bottom lines. It’s complex and hard to overcome.
Yet, many banks have solutions available to them. It comes in the form of data. Yet, they continue to be limited by delusions about what data can really do for them and when they need to apply this technology on a broad scale. Here is a look at a few key delusions financial companies are facing right now.
#1: Banks Are Not Data-Driven Companies
A step back about 25 years ago would reveal a very different world. A consumer knew his or her banker by name and the banker could ask about children and even weekend plans. Today, consumers do not visit banks for interactions – they are no longer loyal to them either. Loans were given based on these relationships.
Today, on the other hand, banks use data to make key decisions. It is a misconception that banks are not data-driven. Many banks do gather information about a consumer before making decisions about who to lend to or when to offer promotions. They are data-driven and rely heavily on data already. It's a misconception to believe banks fear data-driven decision making. The delusion that banks do not feel they need data is a painful one. And yet, while banks are using data, they are not using enough of it.
#2: Data Is Too Expensive
There is no doubt – investing in artificial intelligence and data tools will require some investment. Yet, it is a misconception that data is out of reach even for a small credit union or bank. Consider the numerous ways data can actually save your organization money.
In each of these examples, data not only saves financial services money, but it also helps them to make money. It is easy to see how such applications can pay for themselves in a short period of time.
#3: Customers Don’t Care About Data Use
Bankers often believe they do not need to invest in data, artificial intelligence, or other advanced solutions because customers really do not care. They rightfully believe they need to put more money and investment into forward facing efforts to attract new customers and build relationships with existing customers. Yet, what they are delusional about is that data limits this. In fact, data may be the best possible way to encourage better customer relations.
In fact, consumers today anticipate data-driven solutions to their problems. They want to log into their account, interact with a chatbot – in the middle of the night – and get the answers they need immediately. They want to have their bank analyze their information and create customized promotional offers that fit their needs and their financial goals. And, they expect 24/7 access.
Customer-facing artificial intelligence, then, is incredibly valuable to any financial institution. Solutions such as smartphone access and personal assistants can solve the customers’ problem while also improving their opinion of their banker. This is what consumers want from financial institutions.
Considering each of these aspects, it is clear that data is a part of any advanced financial institution’s future. The key is to become aggressive at implementation to reap the benefits before the competition does.
To see a data sheet coupled with case studies about how fintech can benefit your institution, read the MX Business Case.
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