Data monetization in the banking sector has become increasingly popular in recent years due to evolving customer expectations, new data sharing rules, and opportunities for new revenue streams.
Twimbit is a Singapore research and advisory company. Identify Data monetization is one of the biggest growth opportunities for banks in Asia Pacific (APAC), alongside super app platforms, financial marketplaces, banking as a service, and buy now, pay later (BNPL) arrangements. , is expected to account for more than 40% of bank revenues by 2030.
Monetize your data refer The process of using data to obtain quantifiable economic benefits. Internal or indirect methods include the use of data to create measurable performance improvements and inform decision making. On the other hand, external or direct methods include data sharing, bartering information, outsourcing data, or providing information products and services to obtain favorable terms from business partners.
In the banking sector, data monetization presents significant opportunities to drive growth, improve operational efficiency, and provide value-added services to customers. Experts say banks can tap into a vast trove of customer data to unlock new revenue streams, improve the customer experience and gain a competitive edge.
personalized products and services
Muthukumar Krishnan, Senior Partner, Infosys Consulting said: highlight Our blog post discusses the importance of data analytics in personalization and customer experience. By analyzing transaction history, spending patterns, and other behavioral data, banks can understand how users are interested in different service channels, tailor the overall customer experience, and drive product adoption. Masu.
Mr. Krishnan works with newlyweds looking for home loans at attractive interest rates, young families planning their children’s college education, and entrepreneurs who want all their personal and business banking needs met with one institution. We illustrate these opportunities with different scenarios. .
Krishnan believes that providing a personalized experience is key to maintaining positive customer engagement and satisfaction, and that organizations that understand their financial needs, goals, and level of risk are Point out that you are most likely to become a repeat customer. This improves the overall customer experience.
Customer segmentation and personas
Banks also use data analytics to segment customers into different groups based on factors such as age, spending habits, and major life events.
Customer segmentation divides your customer base into groups with similar characteristics and creates accurate customer personas. This segmentation allows financial institutions to better understand the unique needs of each group and customize products, services, and marketing efforts accordingly. This ultimately not only improves customer satisfaction and loyalty, but also allows banks to allocate resources more effectively, Krishnan says.
Through data analysis, banks can also gain insight into customers’ spending habits and how broader economic changes are impacting saving and spending behavior, allowing them to truly meet individual needs. , allowing us to provide you with more relevant services.
Overall, Krishnan emphasizes that a personalized customer experience is key to increasing satisfaction and loyalty. By leveraging data and customization, financial institutions can stand out from their competitors and drive higher levels of customer satisfaction, loyalty and retention, he said.
Cross-selling and up-selling opportunities
Customer data analysis also helps banks identify cross-sell and upsell opportunities.a Case Study Simon-Kucher shows how banks can leverage data analytics to optimize sales interactions and empower sales and relationship managers.
The strategy consulting firm worked with a large global bank that was experiencing a decline in performance in selling high-ticket financial products such as funds and investments after the pandemic. This decrease was due to the complexity and effort of the purchasing process.
To address this, Simon-Kucher is implementing a systematic approach that leverages data, analytics, and behavioral science to enhance sales interactions, improve the customer experience, and empower bank sales and relationship managers. I have given you permission.
This approach includes identifying psychological barriers to purchasing, auditing the sales process, and optimizing sales performance. First, Simon-Kucher conducted market testing to understand the cognitive barriers impacting high-ticket financial products offered by banks, followed by a thorough assessment, audit, and analysis of banks’ sales teams and sales processes. executed. He then developed and implemented interactive scripts and digital tools to effectively guide clients through the purchasing process, simplifying complex concepts using examples and easy-to-understand language. Finally, testing and validation protocols were introduced to confirm the effectiveness of these solutions.
According to Simon-Kucher, this approach allowed the bank to improve the customer experience and increase commercial effectiveness, resulting in a significant 50% increase in conversion rates.
Evolving regulatory landscape
The surge in data monetization in the banking industry comes as governments around the world introduce new data-sharing rules and establish open banking standards to foster innovation, strengthen competition, and promote financial inclusion. is consistent with
For example India I invested Heavily involved in infrastructure such as Unified Payments Interface (UPI) and Account Aggregator (AA) framework. Launched in 2016 by the National Payments Corporation of India, UPI enables instant real-time payments between bank accounts through mobile devices. On the other hand, the AA framework introduced In 2021, individuals and businesses will be able to agree to securely share their financial data across multiple financial institutions.
Open banking is required in Australia under the Consumer Data Rights (CDR) Act. The law is enacted In 2019, we aim to empower consumers by giving them the right to access and share data held by banks and other businesses across sectors. The rollout of the CDR Act is being implemented in stages, starting with the banking sector, then the energy sector, and then the non-bank lending sector.
Recently, the Central Bank of the Philippines launched Open Finance PH Pilot. The central bank said in a press statement that the pilot is a voluntary initiative of financial institutions to jointly develop an open, interoperable and scalable ecosystem. The platform focuses on giving consumers more control over their financial data and accessing a wide range of financial products and services from a variety of companies.
The launch of the Open Finance PH Pilot in mid-2023 marks the next stage of open finance adoption in the Philippines; issue The 2021 Open Finance Circular Number 1122 is a framework that outlines guidelines to enable data sharing and data portability in the Philippine financial sector.
Webinar: Monetizing transaction data in banking
Join us for this upcoming webinar to hear from banking experts about effectively monetizing transaction data and how it can unlock potential revenue streams for your bank. Please register using this link.
Featured image credit: Edited from freepic
