The most powerful invention in banking is analytics, particularly big data. It gives bankers precise data to help make the best possible offer to every
individual customer….thereby maximizing the strength of the relationship.Analytics has been used profitably by online companies to reach out to customers
based on their location, their surfing patterns, the time at which they shop, the days on which they shop, the products they buy, and much much more.
What can banks learn from this?
As I was thinking about all that analytics and big data can do for a firm, I realized that there is one thing that analytics does not cover. I will explain with an example.
Consider the case of a car manufacturer who can precisely target which model of which car with which accessories is most likely to sell to which customer on
whom it has lots and lots of data. Yet there could be some things that could make the customer reject such a customized offer. The customer might be looking
for a manufacturer with a wide spread of service centers. If you don’t have that, your best offer may not appease that customer. Similarly, if the customer wants
a vehicle that has the highest fuel efficiency in its class, and you are nowhere near the top, you have lost the deal
These examples bring forward the concept that what is dear to a customer is also your core competencies. If what the customer seeks is not among your core
competencies, it will be really difficult to engage with that customer. I see the next application of analytics as identifying the desired core competencies
for the future based on detailed customer insights. Every bank faces the challenge of adding a whole lot of core competencies, such as frugal processes, green
processes, low TAT, widespread service network, risk based pricing, relationship based pricing, faster fraud detection, etc. Since all these competencies cannot
be added simultaneously, analytics can be used to determine the impact on the topline and bottomline of adding different competencies. And that is perhaps
the next big thing for analytics and big data.
