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Use Transaction Data to Deliver Personalization Your Customers Expect

October 13, 2020 by Joan Clark

In today’s financial landscape, there is an unfortunate mismatch between what consumers expect banks to know about them and what banks actually know. There is an increasing concentration in the power of the consumer. They have near-limitless access to information, an ever-growing choice of products and services, and a wealth of opportunities to share their experiences and provide product feedback. As a Deloitte study1 so accurately describes, consumers have become “critics and creators” and as a result, demand more personalized service.

Many financial institutions (FIs) can’t deliver the level of personalization consumers are looking for because they have not equipped themselves with technology that provides insights to fully understand the needs and financial activities of their customers. As a result, many FIs are not able to evaluate transaction data quickly enough to prevent their customers from finding alternative products and providers when they are in the market.  

In fact, according to a recent Financial Brand article2, a shocking number of FIs do not use data-driven insights to improve customer experiences. Based on a survey of bank and credit union marketers they cited:

  • 65% of respondents say they do not use their institution’s data as often as they should to educate and cross-sell customers . 

  • 27% say they do minimal or no personalization in their marketing. 

  • 19% say they don’t use data-driven insights at all. 

How can FIs hope to bridge the gap between consumer expectations for personalization and their own ability to deliver accordingly if they don’t use the transaction data they have at hand? Here are several steps FIs can take toward that end.
 

Look for the consumer story in transaction data

FIs already know the products customers hold with them and transactions made within the institution. But that data only provides a sliver of the overall view of a customer’s full financial profile.

FIs must analyze the entirety of customer’s transactions: online bill payments, ACH payments, incoming fund transfers, and debit/credit card payments to gather a more complete view. In aggregate, these transactions paint a more complete picture of the consumer as a financial entity—not only with their primary institution but with other institutions as well, including retailers and service providers that help manage their lives.

Collectively, a customer’s transactions weave a unique financial narrative—online payments for household bills; transfers to other institutions for loan payments and investments; debit and credit card swipes for food, dining, entertainment, and travel; and a host of other life necessities.

When analyzed properly, transaction data identifies a consumer’s life priorities, depicts patterns in spending behavior, and predicts current life stages, such as having children, buying a house, sending kids to college, or enjoying retirement.

This is what customers want—expect—their FI to know. They expect their FIs to understand their motivations, current financial needs, and, most importantly, financial concerns.

The same Financial Brand article stated that an institution’s brand value can be measured based on the quality of the customer experience they provide. The following data points were gathered from their third-party research.

  • 63% of consumers are highly annoyed with generic advertising . 

  • 80% of consumers say they are more likely to do business with a company if it offers personalized experiences 

  • 91% of consumers would switch brands if a different brand with the same products and services was more authentic and purpose-driven 


These stats shouldn’t be surprising. Consumers experience personalized attention every day from their numerous digital interactions— Amazon, Netflix, Starbucks, and Google searches are just a few examples. Consumers expect their FI to use the data it has available to help them to secure the right products, create wealth, reach their financial goals, and master their finances.

Consider transaction data as a currency

The financial institutions that focus their efforts on understanding their customers better will develop meaningful relationships based on that knowledge and, subsequently, craft relevant and personalized experiences. In turn, these FIs will realize stronger growth and performance than competitors3.

An FI’s ability to know their customers holistically enables them to make better decisions, deepen customer relationships, and drive growth. And the critical dependency to this knowledge is the ability to aggregate, categorize, and make sense of transaction data.

In fact, the data itself is currency—it’s that valuable. With transaction data, institutions can target and craft deeply personalized experiences, execute quickly, and shape the relationships of the future. Without it, FIs are left in the dark, relying on outdated assumptions and imprecise generalizations.

Realize the overwhelming task that is analyzing payment data

The data an institution stores about its customers’ financial transactions is filled with valuable and actionable insights that identify their customers’ patterns of merchant spend, trends in lifestyle activities and interests, life events, usage of held-away products and services, and more. 

This transaction data is available and plentiful within the institution. However, it’s also messy, cluttered, often cryptic, and infrequently standardized.

And the effort to analyze this data is significant. For example, payments for a Chase Bank credit card could have more than a quarter-million unique transaction descriptions. Similarly, payments to Home Depot could have nearly 100k unique transaction descriptions. Condensing the billions of deposit and credit account transactions processed into a distinct set of competitors and retailers is a mind-boggling task that banks just don’t have time to take on.

Partner to develop institution-wide, data-informed strategies

Solutions that provide this level of insights from transaction data are virtually nonexistent. But Segmint’s proprietary technology, extensive AI and automated analytical toolkit, and expert team of advanced-degreed library scientists accomplish this mission with speed and accuracy. The Segmint analytics platform cleanses and categorizes billions of inconsistently labeled transactions, and helps you jump start your competitor research so that you can build products that meet the financial needs of your customers and, ultimately, capture a larger share of their wallet. 

These insights are made available to FIs via intuitive visualizations within the Segmint platform or through Segmint’s data services API, for ease of integration with an institution’s BI toolset, providing opportunities to analyze the data and identify data-driven service strategies. 

For more information and applicable use cases for activating data throughout the institution, check out previous articles of the following topics:

Joan Clark is VP, Product for Segmint, Inc, a provider of a data insights platform that cleanses, categorizes, and contextualizes insights from customer financial transaction data. Click here to learn more about its data analytics and marketing product offerings for financial institutions.

1 https://www2.deloitte.com/content/dam/Deloitte/uk/Documents/consumer-business/consumer-review-8-the-growing-power-of-consumers.pdf
2 https://thefinancialbrand.com/91631/banks-credit-unions-cx-fintechs-marketing-data/?smedia-lnk-ambsu
3 https://advisory.kpmg.us/insights/insights-for-your-role/customer-sales-service-marketing/future-customer-connection.html