Big data and prospects of consumer-driven banking sector

The newest global information technology buzzword is big data. It has the potential of propelling business to new highs of innovation, competition and productivity. But frenzy over its significance is no longer the exclusive preserve of information technology specialists. Executives -especially those charged with strategy, innovation and marketing are also enamored with it. This phenomenon born out of advancement in the ability of business to collect, store, manage, evaluate and leverage enormous amounts of consumer data is the next frontier for business.

For instance, the Oversea-Chinese Banking Corporation (OCBC), one of the largest banks in the Singapore-Malaysia markets has been successful with its customer-centric big data initiatives. OCBC analyzed historic customer data to determine individual customer preferences. It designed an event-based marketing strategy that focused on a large volume of coordinated, personalized marketing communications across multiple channels and touch points including email, call centers, branches, ATMs, direct mail, text messages and 3G mobile banking.

Today, using marketing algorithms atop a sophisticated analytics infrastructure, OCBC more precisely targets customers based on their activity, yielding double- and triple-digit percentage increases in key customer performance metrics since the program began in 2005. OCBC achieved a positive return on investment (ROI) on its implementation within 18 months.

To date with these campaigns, OCBC has experienced a 45 percent increase in overall conversion rates and 60 percent increase in cross-sales. Overall, campaign revenues have increased by more than 400 percent. The bank has also increased its overall marketing productivity and is running over 1,200 campaigns a year – 12 times more than it did before its enterprise marketing management system was installed.

Refining of big data using sophisticated mining and analytics tools is now the key to gaining a complete view of the customer by segment and individually. It is enabling business to understand, predict and shape future customer buying behavior. This is so because big data is now everywhere, in every sector, in every economy, in every organization and user of digital technology – according to McKinsey- which urged businesses to explore its usage if they are to remain competitive.

For business in the service industry such as banks that do not manufacture physical products, data of great consequence are archived from millions of daily transactions. So it is not surprising that banks and financial markets firms are global frontrunners in leveraging of big data to improve business performance, according to a report titled – The real-world use of big data in financial services by IBM Institute for Business Value and Said Business School of the University of Oxford.

According to the report, an estimated 26 percent of banking and financial markets firms are focused on understanding big data compared with 24 percent of global organizations in other sectors. This indicates that majority of banking and financial markets institutions sampled are either defining a roadmap related to big data or already conducting big data pilots and implementations with customer-centric objectives as their top priority.

This is in alignment with global market trends which is compelling businesses to transform from product-centric to customer-centric organizations owing to increasing access to surplus data from social media networks by consumers. Consumers in Nigeria and several parts of Africa are not left behind. Nigeria is rapidly becoming a consumer-driven economy, and it is becoming imperative for banks in the country to leverage their information assets to gain a comprehensive understanding of the market, customers, channels and products as well as competitors.

Consequently, the challenge for banks in Nigeria is how to also leverage its huge cache of big data to improve business performance. Due to the significant investments in technology, process and talent required to leverage big data initiatives, banks in the country can start off with customer analytics. This will ensure improved service to customers as a result of being able to truly understand customer needs and anticipate future behaviors.

It will also provide a learning curve for the business case and roadmap for implementation of big data initiatives which guarantees improved business performance.

Adeola Adejokun works for Kiishi-Lagos, a communications consultancy firm.

http://marketingedge.com.ng/2014/09/28/big-data-and-prospects-of-consumer-driven-banking-sector/