By Scott Russell
The banking industry is not typically a bellwether of innovation. Shackled with strict regulations, compliance restraints, security needs, and legacy systems, financial services historically have not been able to quickly adapt new technology or make sweeping operational adjustments.
However, a wave of change is coming to banking, being driven by the onslaught of mobile, tech-savvy customers seeking a different level of services and support.
The global banking industry is going through what Ashok Vaswani, CEO of Business and Retail banking at Barclays, dubs a significant transformation of unprecedented change that will ultimately lead to ?big winners ? or possibly big trouble.?
Vaswani notes that only two years ago, the mobile banking platform at Barclays UK had zero customers. Now it has 3.2 million customers who log in an average of 28 times monthly, giving the platform 80 million logins a month. The result? Loads of Big Data that if used wisely, can keep Barclays on the big winner side of the equation.
The real-time banking customer
The 21st century bank is not the same bank that just a few years ago kept banker?s hours and waited for customers to arrive. Modern banking is a 24/7 business with customized online services, mobile apps and payment systems, and Twitter-based customer support. Its customers no longer interact at the branch or ATM but instead want to bank from their mobile devices.
That customer ? especially those in the millennial age group — is demanding more from the bank. A Scratch survey? reveals that banks were failing to serve the needs of the younger age group, and 53 percent didn?t think their banks offered anything unique from other banks. A surprising 71 percent said they would rather go to a dentist than listen to what a bank has to say, and 33 percent believe they don?t need a bank at all.
This new banking customer wants instant gratification ? immediate new account or loan approval, easy ways to monitor balances, and timely methods to pay bills or a mortgage. Speed is a critical element of everything that happens in financial services.
Because of that, banks are speeding up processes on the front end and adding digital automation on the back end to cut costs and improve service. They have to be proactive, offering services before the customer can even think about it.
Big Data shapes new services
Banks are turning to Big Data to keep their services ahead of customer need. For instance, Commonwealth Bank of Australia (CBA) uses an automated Big Data system to capture and analyze every customer transaction, including deposits. CBA processes nine million transactions per day, handles 40 percent of the card transactions in Australia and maintains 12 million account profiles.
If a customer makes an unusually large deposit, the automated system will trigger a workflow that suggests a relevant offer, encouraging that customer to keep her money invested at the bank.
While the data is collected in real time and the bank could make the offer minutes after the customer deposit, Commonwealth determined the ideal timing. Waiting three days to make an offer was too long, but making the right offer within the day lead to significantly improved conversion, as 60 percent of customers took action.
Previously, only 10 percent of customers responded. Of those who got an offer, 38 percent converted and kept their money in Commonwealth accounts.
Banks that collect Big Data on customers? regular banking habits can also tailor how they communicate offers and pick the right channel, i.e., calling some customers, emailing others, and texting millennials.
Customer service goes virtual
Banks are using Big Data to make sweeping workforce adjustments. By analyzing platform and usage data by channel, one bank noticed that the bulk of its loan applications were coming in from customers using tablets between 9 p.m. to10 p.m., long after branch loan officers had gone home.
The pipes of customer service had to be completely changed, and the bank had to be keenly aware of how its loan application processes performed (and appeared) on tablets, both Android and iOS-based devices.
Banks also have to react to new OS upgrades that affect customers on a tablet or mobile. With the recent Apple iOS 8 upgrade, banks had just a few days to prepare their mobile platforms for customers using the new OS.
And if that customer needed help late at night to complete a loan application, the bank had to be ready. So it allocated its workforce accordingly, adding staff to its call center at peak evening usage hours and offering real-time support for customers over IM or chat.
Banking gets social
Social media is another source for Big Data that is improving customer interaction. Barclays Vaswani watches a live feed of the bank?s Twitter account in his office, so he can monitor tweets relevant to his brand, the banking processes, and the branches. Watching the customer requests for assistance, Vaswani and his team can see which branches are experiencing problems, such as slow customer support or long queues.
Vaswani will call a branch manager and find out what is happening if he sees too many customer tweets asking for help. Barclays has learned that banks have to be proactive and not just monitor social media, but manage customer support using Big Data analysis from Twitter, Facebook, and related hashtags.
Social media along with e-mail based Big Data analysis helping banks identify trends. They can monitor the noise and chatter to determine customer feelings around a new product. By looking at the semantics in the text, the bank can analyze content and determine if customers are frustrated, happy, sad, or upset with their overall banking experience.
A deeper dive into the data can help the bank determine the issues that need attention, such as application processing, fees, wait times, help and support. The bank can use Big Data to make a Top 10 list of items that need attention, then assign an analyst to address and resolve the issues.
The bank of the future will likely not resemble today?s banks. The banks that stay in the game will be the ones that count on innovative data services and data management and respond with speed, transparency, access, and digital automation.
The author is the COO of SAP Asia Pacific Japan