How to Improve Cross Sell and Customer Experience in Banking
I recently refinanced an existing mortgage on an investment property with my bank. Like most folks these days, I went to their website from my iPad, fill out an online application form, and received a pre-approval decision. Like any mortgage application, we stated our liabilities and assets including credit cards, auto loans, and investment accounts some of which were with this bank. During the process I also entered a new contact email address after my email service was hacked over the summer. The whole process took quite a bit of time and being an inpatient person I ended up logging off and coming back to the application over the weekend.
I walked into my local branch the following week to do a withdrawal with my bank teller and asked how my mortgage application was going. She had no clue what I was talking about as though I was a complete stranger. When I asked her if they had my updated email address that I entered online, she was equally puzzled stating that any updates to that information would require me to contact all the other groups that held my brokerage, credit card, and mortgage services to make the change. That experience was extremely frustrating and I felt like my bank had no idea who I was as a customer despite the fact my ATM card as printed on it “Customer Since 1989”! Even worse, I expected someone to reach out to me after entering my entire financial history on my mortgage application about moving my investment accounts to their bank however no one contacted me about any new offers or services. (Wondering if they really wanted my business??)
2015 will continue to be a challenge for banks large and small to grow revenue caused by low interest rates, increasing competition from non-traditional segments, and lower customer loyalty with existing institutions. The biggest opportunity for banks to grow revenue is to expand the wallet with existing customers. Though times are ahead as many bank customers continue to do business with a multitude of different financial institutions.
The average U.S. consumer owns between 8-12 financial products ranging from your basic checking, credit card, mortgages, etc. to a wider range of products from IRA’s to 401K’s as they get closer to retirement. On the flip side the average institution has between 2-3 products per customer relationship. So why do banks continue to struggle in gaining more wallet share from existing customers? Based on my experience and research, it stems down to two key reasons including:
- Traditional product-centric business silos and systems
- Lack of a single trusted source of customer, account, household, and other shared data syndicated and governed across the enterprise
The first reason is the way banks are set up to do business. Back in the day, you would walk into your local branch office. As you enter the doors, you have your bank tellers behind the counter ready to handle your deposits, withdrawals, and payments. If you need to open a new account you would talk to the new accounts manager sitting at their desk waiting to offer you a cookie. For mortgages and auto loans that would be someone else sitting in the far side of the building equally eager to sign new customers. As banks diversified their businesses with new products including investments, credit cards, insurance, etc. each product had their own operating units. The advent of the internet did not really change the traditional “brick and mortar” business model. Instead, one would go to the bank’s website to transact or sign up for a new product however on the back end the systems, people, and incentives to sell one product did not change creating the same disconnected customer experience. Fast forward to today, these product centric silos continue to exist in big and small banks across the globe despite CEO’s saying they are focused on delivering a better customer experience.
Why is that the case? Well, another reason or cause are the systems within these product silos including core banking, loan origination, loan servicing, brokerage systems, etc. that were never designed to share common information with each other. In traditional retail or consumer banks maintained customer, account, and household information within the Customer Information File (CIF) often part of the core banking systems. Primary and secondary account holders would be grouped with a household based on the same last name and mailing address. Unfortunately, CIF systems were mainly used within retail banking. The problem grows expotentially as more systems were adopted to run the business across core business functions and traditional product business silos. Each group and its systems managed their own versions of the truth and these environments were never set up to share common data between them.
This is where Master Data Management technology can help. “Master Data” is defined as a single source of basic business data used across multiple systems, applications, and/or processes. In banking that traditionally includes information such as:
- Customer name
- Account numbers
- Household members
- Employees of the bank
Master Data Management technology has evolved over the years starting as Customer Data Integration (CDI) solutions providing merge and match capabilities between systems to more modern platforms that govern consistent records and leverage inference analytics in to determine relationships between entities across systems within an enterprise. Depending on your business need, there are core capabilities one should consider when investing in an MDM platform. They include:
|Key functions:||What to look for in an MDM solution?|
|Capturing existing master data from two or more systems regardless of source and creating a single source of the truth for all systems to share.||To do this right, you need seamless access to data regardless of source, format, system, and in real-time|
|Defining relationships based on “business rules” between entities. For example: “Household = Same last name, address, and account number.”||These relationship definitions can be complex and can change over time therefore having the ability to create and modify those business rules by business users will help grow adoption and scalability across the enterprise|
|Governing consistency across systems by identifying changes to this common business information, determining whether it’s a unique, duplicate, or update to an existing record, and updating other systems that use and rely on that information.||Similar to the first, you need the ability easily deliver and update dependent systems across the enterprise in real-time. Also, having a flexible and user friendly way of managing those master record rules and avoid heavy IT development is important to consider.|
Now, what would my experience have been if my bank had capable Master Data Management solution in my bank? Let’s take a look:
|Process||Without MDM||With MDM||Benefit with MDM|
|Start a new mortgage application online||Customer is required to fill out the usual information (name, address, employer, email, phone, existing accounts, etc.)||The online banking system references the MDM solution which delivers the most recent master record of this customer based on existing data from the bank’s core banking system and brokerage systems and pre-populates the form with those details including information for their existing savings and credit card accounts with that bank.||
|New email address from customer||Customer enters this on their mortgage application and gets entered into the bank’s loan origination system||MDM recognizes that the email address is different from what exists in other systems, asks the customer to confirm changes.The master record is updated and shared across the banks’ other systems in real-time including the downstream data warehouse used by Marketing to drive cross sell campaigns.||
The banking industry continues to face headwinds from a revenue, risk, and regulatory standpoint. Traditional product-centric silos will not go away anytime soon and new CRM and client onboarding solutionsmay help with improving customer engagements and productivity within a firm however front office business applications are not designed to manage and share critical master data across your enterprise. Anyhow, I decided to bank with another institution who I know has Master Data Management. Are you ready for a new bank too?
For more information on Informatica’s Master Data Management: