Data analytics can bring much desired innovations to the banking industry, helping organizations perform better. With more and more banks and financial institutions emerging, those aspiring to gain competitive advantage need to make strategic use of data analytics. The technology has already changed the way traditional banks worked previously and has significantly improved the process of decision making. However, there still are many more aspects in banking industry which can be transformed by data analytics for achieving greater profitability and reduced risks. The data collected in banks are usually very complex and managing and analyzing them manually or through traditional data software isn’t easy. Analytical tools can, on the other hand, perform the task with high accuracy and efficiency. Here are the areas of the banking industry where data analytics can bring significant changes:
- Knowing the Customers Better
It’s important to know and understand the customer behavior. With predictive analytics organizations can segregate different customer segments and customize their experiences with relevant and individualized messages for different customer profiles. This may help in generating higher response rate and delivering the right product to the right person.
2. Detecting Fraud
Fraud is a major concern for banking industry and it can cost the banks and financial institutions dearly. Digitized systems have become the desired targets for cyber criminals. In order to prevent frauds committed by cyber criminals, banks need more intelligent systems and sophisticated tools. Data analytics can be used to identify and prevent fraudulent activities and predictive analytics can then be applied for further analysis.
3. Optimizing Marketing Strategies
Data analytics can also help in planning marketing activities and optimizing them for better results. An insight into customer behavior and usage patterns can provide banks with a deeper understanding about their customers. This, in turn, helps the marketing teams deliver the right messages to the right customers at the right time.
4. Maintaining Customer Relationship
Be it any organization, feedback is important and even more important is managing the feedbacks. With data analytics, financial firms can maintain their relationship with customers by analyzing the feedbacks and providing them with the right products and services. Analytics makes it easy to sort data and understand the individual preferences of the customers.
5. Application Management
There are a number of applications used by banks and financial firms. Managing such applications, analyzing the data derived from them and maintaining their smooth functionality is of utmost importance. There must be no errors or delays in processing, no exclusion of important variables and steady operation, and analytics can ensure the same.
6. Acquiring and Retaining Customers
With analytics, banks can better identify and target prospective customers. Acquiring the right customers helps organizations in expanding their customer base. The technology also helps in retaining customers by earning their loyalty. Data analytics provides an insight into why a customer left and how to keep others satisfied. Analytics also helps in identifying which customers is looking for other banks to associate with and the reason behind their decision.
7. Cross Selling Products and Services
Efficient cross selling can be done by analyzing the behavior of the existing customers. Cross selling increases profitability and strengthens customer relationship. With data analytics banks can analyze the usage, spending pattern and other behaviors of their customers and devise the right cross selling strategy. In today’s competitive market securing and retaining customers is itself a huge task and thus effective cross selling can help a great deal in increasing profits.