Our research identifies three key reasons for this:
- The volume of data being captured is so large that banks have difficulty in identifying the elements of data which can truly transform their customer propositions
- Banks continue to be organized in silos. As a consequence, analytics functions are not centralized and not all areas of the bank place analytics at the heart of their strategic agenda
- Many functions have entrenched cultures which reduce the impact of analytics. Retail banks have typically been driven by a product and channel focus. Commercial success has been delivered by a combination of product understanding, intuition and experience. This culture remains endemic
The rise of the analytical agenda is in direct conflict with these behaviors. It is based on statistical wisdom, logic and reason. Its models are controlled against sample data so that their impact can be validated and quantified. If adopted, they can improve cross-selling, customer retention and customer experience. Yet “the business” is not always receptive to the insight provided by analytics teams, especially when it contradicts personal experience.
Some commentators have argued that organizations in a world of ‘Big Data’ need to develop a ‘data-driven’ culture to overcome this. Whilst this is partially true, it is perhaps an over-simplification for two reasons:
- Data of requisite quality will not always exist to inform every decision
- Even where it does exist, an overly ‘data-driven’ culture could kill off innovation. Would a purely data-driven culture have embraced the Walkman, a product developed with minimal market research?
We believe that a few practical steps can have a significant impact on both the culture of analytics and the economic value derived from customer analytics:
- Senior leaders are appointed who evangelize the power of analytic insights to challenge and enhance business strategy
- Analytics teams adopt a pragmatic mindset. They identify business opportunities, adopt an 80 / 20 perspective and are comfortable being directionally correct
- Analytics business partners, with strong analytical understanding and good stakeholder management skills, face off to product and channel teams
- Analysts are rotated in and out of teams to develop their business understanding
- The value delivered by customer analytics is measured, tracked and communicated through dashboards and KPIs
With these building blocks in place, organizations can begin to realize the true commercial potential of customer analytics.
Neel Arya, Director, KPMG in the UK