For many retail banks, the task of regaining consumer trust in the wake of the financial crisis of 2008-09 will be a difficult and ongoing challenge. With the sector still viewed with suspicion by many people, presenting a more personal face and improving customer service levels will be a high priority.
It was noted by FusionExperience chief executive Steve Edkins in an article for ITProPortal that this has become even more important in today's connected era, where the internet and social media mean dissatisfied customers are able to quickly voice any complaints to a wide audience.
In order to improve their customer service and avoid such issues, many retail banks are therefore turning to big data to offer services tailored to individual customers.
According to a study from the Centre for Economics and Business Research (Cebr), more than four-fifths of retail banks (81 per cent) will have adopted big data analytics by 2020. As well as helping track key industry trends and allowing banks to proactively adapt their strategy, this will also have a key role to play in building profiles of individual customers.
This can be useful at every stage of the customer journey. Mr Edkins noted that initially, big data analytics can be used to more effectively evaluate risk and creditworthiness. Then, when it comes to retaining customers, offering specific deals and tailoring their services accordingly will go a long way towards making consumers feel valued.
However, financial institutions will face two key challenges when it comes to adding big data to their customer service activities. The first will be how they extract relevant information from the huge amount of data they collect – separating the signal from the noise in order to make informed decisions.
The second will be how they collate this data and turn it into a useable format in time to make a difference. Today's fast-paced world demands the ability to extract, analyse and act on insights gained from data quickly if a company wants to maintain a competitive advantage.
"It is no small feat for retail banks to ingratiate big data into their processes as it often requires a daunting technological overhaul," Mr Edkins said, adding that one of the biggest challenges for these firms is getting complex legacy systems in line with today's big data capabilities. These often result in key data being placed in silos, and make it difficult for businesses to get the information they need quickly.
"To rectify this, banks will need to make better use of growing data sets such as correspondence, loan facility letters, contracts and the diversity of customer interactions if they want to offer bespoke consumer products that will allow them to fend off their more agile competitors," he stated.
However, if retail banks can get this right and build a strong customer service culture centred around big data, the rewards on offer are significant. Cebr's data forecasts that effective analysis of data could add £240 billion to the UK's economy through improved efficiency and better understanding of the market and customer demands.