FIs must use data to stay in the game

The 2020 Financial Marketing Trends Report, sponsored by Deluxe, found that optimizing the customer experience was deemed the biggest opportunity for bankers, followed closely by leveraging data-driven personalized marketing.

The biggest “Oh wow!” moment of the report comes from big challenges: 90% of respondents felt that data infrastructure and accessibility were a major or moderate challenge and 97% felt that data analytics tools and capabilities were a major or moderate challenge. Banks are still struggling greatly when tackling data.

Deluxe Data-Driven Marketing worked with Gatepoint Research to understand why this is and how to help institutions maximize their efforts. 

The data tells a story

Gatepoint Research surveyed 300 executives; most were senior decision-makers such as CXOs, VPs and directors. When asked how they will measure success over the next 12 to 18 months, respondents led with revenue growth and ROI, followed by increased acquisitions. Forty-four percent cited an improved customer satisfaction as their top priority (up from 30% in 2018), while 35% (up from 32% in 2018) prioritized increased adoption of digital channels and only 7% focused on retaining customers. 

Given the need to grow the overall customer base and the need to support digital channels, the increases in prioritization make sense. But the significant drop in importance of cross-selling and retention is less logical. At a time when customer bases are under attack from larger FIs as well as fintech firms and big tech organizations, protecting current portfolios of customers should be a major priority. At the end of the day, acquiring new customers will mean little if a large number of customers and members are leaving.

The findings warn that everything will soon be powered by artificial intelligence (AI) and fueled by data. Banks and credit unions that fail to accept this will be in trouble. Every FI is now a data company — data is critical to understanding consumers so you can improve service, develop better products and increase revenue by selling more.

“Many organizations are working with their marketing agencies and vendors to figure out where they can gather data to get that understanding,” says Ali Hanyaloglu, Senior Director of Product Marketing at Criteo, speaking during an eMarketer webinar on trends in marketing technology. "This is why, within marketing, larger and ongoing investments into an institution’s martech stack have become increasingly important."

The plot point: Your marketing tech stacks need continual updating

Of companies surveyed worldwide, 63% are working on some stage of martech implementation, while 15% are discussing implementation and only 3% are doing nothing.

For example, integrating all available data into a single database for maximum utility — building complete profiles of individual consumers — is a key foundation for campaigns in the years to come. This can take shape in a Customer Data Platform (CDP). A key function of CDPs is pouring data out of restrictive internal silos to get an enterprise-wide view of data.

But then what? More than half (52%) of survey respondents said their FIs don’t have a data scientist or analyst on staff to help with their marketing. That high ratio also means many of the banks and credit unions that rely on data-driven marketing lack an essential tool to help them reap the greatest value from their data.

This isn’t shocking though, while Data Scientist is a popular career these days, it's challenging to find experienced data scientists that know the complexities of the financial services industry. This high demand field can also make it difficult to retain people once you find them. One way to get around this challenge is to look for a partner that can bring this skill to your financial institution. We wrote about this strategy in our latest white paper, World-Class Marketing for World-Class Financial Institutions. In it, we share data and recommendations from Forrester, Gartner and other leaders in the data-driven marketing space.

There's good and bad news

On a positive note, many financial institutions are using data in their marketing efforts: 44% use data to measure marketing program success and 43% to understand and predict customer needs. Thirty-nine percent and 36%, respectively, use data for budget optimization and benchmarking.

However, less than a third use data to develop their marketing audiences, and only 27% use it to personalize offers. Additionally, 20% said they didn’t use data for any of the marketing functions cited in the survey.

The chief marketing challenges

Besides the struggle to gather and use data, the top challenge executives find concerning is improving audience targeting. To do this, personalization will be key. Today, 73% of consumers expect special treatment for being a loyal customer. Machine learning (ML) and AI provide more accurate data, allowing companies the opportunity to more accurately interact with their customers and provide a unique experience. Companies will need to know how to use these ML and AI to their benefit. 

In addition, available talent poses a challenges. As data sources and technology continues to expand, more FIs are partnering with third-party providers to get help with digital marketing. 

The big takeaway

The survey underscores a key takeaway: While many financial institutions’ top priorities and goals could be addressed through the improved use of data, too many banks and credit unions have still not taken the steps needed (such as hiring a data scientist) to maximize the effectiveness of their data.

If you want to learn more about how data analytics can help support your marketing organization, download our white paper, Supporting Customer Acquisition Through Effective Data Modeling. This white paper shares how data modeling helps banks and credit unions to be more efficient and generate a much higher ROI for their institution.

Having access to data scientists and data analysts — whether on staff or through a third-party organization like Deluxe Marketing Solutions — is no longer optional for financial institutions that want to improve the effectiveness of their marketing campaigns. It’s a necessity.

The information provided in this blog does not, and is not intended to, constitute legal or financial advice.