Big data and customer analytics have and continue to be hot topics in retail banking. According to Bob Meara, senior analyst with Celent’s Banking practice, “62% of financial institutions in a recent Celent survey strongly believe that customer analytics offers significant competitive advantages and 53% strongly feel they need a granular, holistic and forward-looking view of customers to be competitive.”
But while banks and credit unions understand that there’s a need for customer analytics, questions still remain on what big data financial institutions need to generate said analytics, and where can they get it. In a recent predictions piece, James Plath, digital lead for the financial services industry at Gartner Consulting, touched on a viable source: “Banks own – arguably – the richest data set in existence on any person: transactions.”
Transaction data—data from consumers withdrawing and depositing at ATMs; data from customers making purchases at point-of-sale (POS) terminals; data from home buyers starting mortgage applications on their mobile banking apps and then completing them online once they get home—is chock full of rich customer engagement and customer experience intelligence. The problem lies in somehow getting access to it, and then making sense of all the information.
What is transaction data?
For anyone concerned about operational performance and consumer engagement, transaction data is your gold mine (or bitcoin mine, depending on where you see the greatest analogical value). Banking, retail and payment processing networks play host to an “always on” data source—consumer transactions. Each transaction that travels across your ATM, POS, Mobile banking or Internet banking environments contains useful information on what the customer is experiencing, how networks and applications are responding and what the business value of each transaction is from a revenue or service perspective.
Where is transaction data?
Similar to traditional mining—getting access to and refining the “gold” in transaction data is where the difficulty lies. There are an ever growing number of complex moving parts in a transaction network, and today’s banks, payment processors and retailers are also dealing with an explosion in the volumes and types of electronic consumer interactions they must support. For example, most banks now run a minimum of eight services per ATM, with many running upwards of 40 to 100. Back end transaction approvals need to come from a variety of value added service and host authorization connections, depending on the transaction type. Some may still go to the payments switch, but more now go to external applications servers and third party service providers. These increasing transaction volumes, infrastructure complexity and growing consumer expectations cannot be managed in a timely, cost effective way without real-time access to consumer-centric transaction data. It will be those financial institutions that find a way to access, and more importantly, make sense of, all this transaction data that will meet and exceed the high expectations of today’s consumer.
Why use transaction data?
Forward thinking financial institutions have already started reaping the rewards from investing in tools that allow them easy access to transaction data. For example, last year one of the largest banks in the Middle East began leveraging a solution from INETCO and NCR that allowed them real-time access to the data contained within every transaction flowing through their ATM network. This solution provided the bank’s IT Operations teams and ATM line of business executives with easy access to transaction data, made available through configurable dashboards, alerts and analytics. The bank’s data “mining” efforts that previously took days or weeks, is now done in real-time—which in turn makes the intelligence gathered that much more actionable. The results: the bank reacts in seconds (rather than hours) to consumer related transaction issues, has improved ATM availability, and is able to optimize their ATM service offering through easy analysis of consumer usage patterns. They’ve also been able to leverage the rich consumer intelligence gathered from their ATM transactions to build data-driven marketing campaigns targeting off-us consumers in efforts to convert these users into new, higher margin, on-us customers.
BECU is the largest credit union in Washington and the fourth largest in the United States. They also realized the value of leveraging their rich transaction data beyond the ATM operations silo. With the hard part of collecting and correlating this data already being done by INETCO Insight, they could now explore ways to utilize this data for adopting data-driven business strategies and performing robust customer analytics. Their recent licensing INETCO Analytics allows BECU to gain visibility into how their members are making use of their ATM channel.
“Understanding the member experience is of paramount importance to BECU. INETCO Analytics effectively shrinks our member transaction data gathering and analysis time from weeks down to minutes—which allows us to make decisions based on timely and comprehensive cardholder analytics. INETCO has listened to the specific market needs of financial institutions to deliver a product that provides a lens into our member experience and our business,” Shirley Taylor said of BECU’s purchase of INETCO Analytics.
What’s to come?
I expect to see banks move from talking about Big Data, to deploying tools that allow them access to, and an understanding of, transaction data. And with that improved intelligence, I see these banks enhancing the consumer banking experience while improving their own profitability.
Marc Borbas is the VP of Product Marketing for INETCO. With over 15 years of experience working with financial technology start-ups, Marc drives the product strategy for INETCO’s real-time transaction monitoring and customer analytics solutions.