The EY 2018 Global banking outlook survey noted that banks in Asia Pacific expect to improve financial performance over the short to medium term.
The confluence of multiple technologies, the push by regulators for greater transparency and collaboration among competitors – perhaps begrudgingly through open banking initiatives – and the rise of the digital savvy consumers, is leading to fundamental shifts in attitude by financial institutions on the need to embrace technology, new ideas, and new ways of doing things.
One factor lending itself to this change is how financial institutions manage customer data.
Value of data
As Henry Aguda, senior executive vice president, chief technology & operation officer Union Bank Philippines and chairman of the Board at UBX Philippines, put it: “data to us is everything that we have on our customers.”
Indeed, banks are one of the few business organisations in the world that may actually know more about a banking customer than anyone else. Not only do they have personally identifiable information about every customer doing business with them, but through every loan, deposits, and purchase made through credit, debit cards, money transfers and ewallets, pretty much have an idea of our social standing.
This depth of information also presents a challenge for some – how to create a single view of the customer? The reality is that most financial institutions are a conglomeration of businesses each of which has one view of the customer. And decades of acquisitions, mergers and divestitures have resulted in complexities now to deep as to make it difficult to ignore and too important to just throw away in favour of new ways of work.
That is the predicament Aguda and his team faced as they looked for ways to standardise and clean decades-worth of accumulated data.
The start of a data journey
For many business managers at banks, monetizing data is one of the primary goals for the organisation’s data-driven strategy. After all, customer data is the single biggest advantage that banks have over Fintechs and tech companies.
“But the reality is that if you don’t have a data governance strategy that takes into consideration regulations on proper use and handling of customer data, there is a risk that you are unable to deliver meaningful value to your customer which translates into business opportunities for the bank, but you also run the risks of non-compliance,” argued Aguda.
Indeed the Deloitte paper, Finally: customer analytics for banks, noted that the systems and processes in place throughout most banks are generating more data than ever before, and it’s only growing. Deloitte believed that even after pulling together these different strands of data, the bank won’t know how to effectively use it – at least not by using the same old data and information management approaches.
Union Bank’s data strategy
Aguda acknowledged that Union Bank is fully compliant with regulatory compliance related to data privacy. Having a single repository of customer information enables the bank to pursue an integrated financial crime system to enable it to tackle cyber issues and fraud.
“In the area of marketing, we are looking to inject artificial intelligence to allow us to determine the preferences of our customers based on their calling pattern with their cell phone. We expect to do more as AI technology advances,” he opined.
The way forward
Union Bank of the Philippines’ data journey has led it to create a single view of its customer. In the process it is able to comply with banking regulation on customer data privacy protection. With a governance strategy in place, the bank is now able to craft personalised, in-the-moment offers that it believes are aligned to what customers want.
Perhaps the learnings shared by Aguda can best be summed up by three recommendations as suggested by David McGinty, managing director – Financial Services, Customer Insight & Growth, Accenture:
Rethink your data: Start with bringing together relevant data to give an accurate foundation. Identifying and establishing timely, relevant customer data is the foundation for becoming hyper-relevant to customers and ‘living in the moment’.
Invest in the New: With the data in place, invest in and integrate ‘MadTech’—marketing and advertising technologies—to unleash the value of that data through accurate targeting of tailored offers and messaging. Combining more advanced data and analytics capabilities with the latest campaign management tools will enhance and fully personalise end-to-end journeys, while ensuring systems are scalable enough to support rising usage. With a careful blend of data and technology, a drive towards greater automation will free up your marketing teams to focus on those value-add services your customers desire.
Integrate for innovation: Create a ‘hard lock’ between data, analytics and marketing teams by breaking down the traditional silos and empowering people in all these areas to work and innovate together. Almost every company that succeeds in being hyper-relevant to its customers has merged these teams together to some extent.
