As competition in the banking sector has become stiffer than ever, especially with the digitalization of the financial industry, banks have been looking how to improve their efficiency.
One solution is to make a better use of large amounts of data that banks have collected over the years. The problem is that having a lot of data in and of itself won’t really solve issues at hand. One needs to have the right tools and skillset to make a proper use of data.
That is why the best solution for banks has been the implementation of business intelligence (BI) software. When it comes to structuring, interpreting, finding insights and visualizing data, there is no better thing than a BI tool. A properly integrated BI solution helps a company not only to look back at historical data, analyze it and get actionable insights into current performance, but also make predictions and improve strategy based on past and existing trends.
How banks can benefit from BI
There are several key areas in which successful modern banks use BI solutions to stay competitive and profitable:
- Improving customer interaction. An important strategy for a successful bank is to retain its existing customers, understand their preferences and cross-sell to them appropriate products and services. This is both sustainable and profitable. Since customers leave behind significant traces of data, BI can help to figure out what they need now and will likely need tomorrow.
To focus more attentively on its customers’ needs and provide a better service, TD Bank Group, for example, invested into Microsoft Azure.
“Our Azure investment is helping to quickly drive a 360-degree view of our customers, so we can build deeper relationships with them,” – said Imran Khan, Head of Digital Experience at TD Bank.
- Effective marketing and sales. As BI helps to gather information and better understand clients, marketing improves and becomes more targeted, which in turn generates better leads. As these high-quality leads pass to sales, their closing rates improve, bringing in more revenues.
- Improving internal operations. Looking at insights, BI software can reveal what should be improved to make operations more efficient. After the what question, comes the how: how to better organize procedures, allocate budgets between different departments, and analyze the performance of employees and other key measures. These questions can show where management could cut costs or, on the contrary, add more resources to units that perform better.
JPMorgan Chase & Co. (JPMC) introduced Tableau to boost its operations. Over the years, this brought the bank’s operations and reporting into a new level. What started as a project with 400 Tableau users in 2011 is now a system with around 30, 000 users and over 500 teams across the bank’s various departments using the software to help make strategic decisions.
“[Tableau] evolved from nothing to where we are today, because people want to use it,” said Jason Mack, Director of Analytics at JPMC, according to the software’s own website.
- Finding bestselling products. BI can help to find insights into a product usage and reveal which products and services are selling more and driving better profits. Likewise, it can identify products and services that are struggling. This may then lead to a change in strategy or further analysis of why certain products under-perform and how to improve that.
- Identifying best and worst performers. Similar to the previous point, BI can help banks to drill down into operations and see individual performance information down at the level of a single commercial unit. This can reveal important ratios and show the actual performance of individual branches rather than the average across a city or entire region. This can eventually lead to the improvement of operations via staff training or introduction of new methodology.
Going back to JPMC’s integration of its BI solution, we saw how the bank used Tableau to build better data sets that, among other things, could effortlessly integrate marketing, products and customer data. This helped marketing teams to analyze and track customers’ entire journeys and personal preferences. These insights in turn helped the bank to improve its website design, come up with new marketing and promotional strategies, and launch new products.
With the spread of fintech companies and tech giants, like Amazon, getting into the financial services industry, banks are finding themselves in a very competitive environment. To keep their leading positions, we saw how banks, like TD Bank and JPMC, improved the ways they operate with the use of BI.
A right BI solution can be the difference between growth and decline. Data has long been considered a fount of knowledge and one must simply look at the right places using proper tools. Seek and you shall find, as proverb goes.
Where is the catch?
With all the available data that banks have, you might think that all of them will be jumping at the opportunity to embrace BI. Well, of course, it isn’t that simple, otherwise, all banks would have made a BI transition long ago. The second part of this article will focus on these challenges and point out possible solutions of effectively dealing with them.