Fewer than 1 in 10 respondents to a survey conducted by KPMG believe that banks are effectively mining their customer data, resulting in a mismatch between customer needs and product offerings. The survey – conducted amongst delegates at the 2012 International Payments Summit – also reveals that just 5 percent of banks are planning to invest in data analytics between now and 2017.
The findings have been released to coincide with Big Data Week (23rd – 27th April) - launched to focus corporate attention on the business benefits of better managing the data available to them.
Neel Arya, director of KPMG’s customer and channel advisory team, says: “By failing to capitalise on the customer data at their disposal, high street banks are missing opportunities to enhance their customers’ experience, create products and services that are relevant to customer needs and build long-term loyalty. What’s more, many banks have yet to prioritise existing and emerging data from external sources such as social media.
“With the proliferation of internet banking, the growing use of mPayments and customers willingness to air their complaints across Facebook and Twitter, so much data exists which can generate significant new insights into customer behaviour, if it is successfully mined. Yet, if the traditional high street banks are too slow to make better use of the customer data on their doorstep they run the risk of losing out to new entrants in the marketplace.”
As part of a wider examination of the bank-customer relationship, KPMG has also undertaken qualitative analysis of high street banks’ use of data. The results show that banks acknowledge three key challenges when it comes to using data gleaned from external data providers and sites such as Facebook, Twitter or blogs:
Arya continues: “It’s encouraging that many within the industry accept that more should be done to leverage the potential of the information at their disposal, but worrying that so few seem prepared to invest in this area. If the focus remains on banks’ centrally collected data, customer analytics will remain incomplete. The simple fact is they need to harness the data they already own, but not at the expense of ignoring new material.
“It’s fair to say that many banks are faced with legacy systems which make it difficult to achieve a single customer view, but the world of data is moving so fast that inaction is no longer acceptable. Big data needs to be turned into ‘big insight’ and unless it is harnessed quickly and effectively, the big banks will struggle to compete with the more customer centric and digitally literate new entrants to the market.”
KPMG’s research also revealed that 69 percent of respondents view relationships with their bank as ‘all about mobile’ with 32 percent suggesting that mPayments are ‘growing quickly’.
Mark Hale, head of payments at KPMG, suggests that the result will be a proliferation of data which will grow in value. He says: “People engage more with their bank through their payment behaviour than they do through almost any other medium. A person’s payment activity tells you an enormous amount about their economic behaviour; what they do, who they do it with, where they go, and when they have done it. Most importantly, it allows you to predict future behaviours and needs.
“In the digital and information age we are now in, this is akin to ‘digital gold’. Banks need to build better and deeper relationships with their customers to generate new revenues and attract more deposits so should be thinking through their strategy for effective customer data management and achieving really high points of personalisation. Anything less misses and they run the risk of being left behind.”
Mike Petrook, KPMG Press Office
020 7311 5271 (t), 07917 384 576 (m) or firstname.lastname@example.org
Notes to Editors:
Survey conducted by KPMG at the 2012 International Payment Summit, March 2012
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 11,000 partners and staff. The UK firm recorded a turnover of £1.7 billion in the year ended September 2011. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 152 countries and have 145,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.