Over 30 years ago, the banking sector was revolutionized with the introduction of ATMs (automated teller machines). These machines reduced the number of tellers each branch needed, which paved the way for thousands of new branches to launch.
Similarly, big data, artificial intelligence, and RPA are in the process of improving almost every aspect of banking, from enhancing the efficiency of different marketing platforms to helping customers make better decisions about their spending and investments, and more. Hence, it’s safe to say that the banking industry is now on the verge of another technological revolution. More recently, banking institutions are resorting to competitive intelligence in an attempt to say one step ahead of their competitors and serve their customers better.
Banks have strived over the years to establish distinctive skills to achieve a competitive edge and maintain development that rivals can not match. Today, financial institutions compete on the basis of what they know, how easily they understand it, and how effectively they use what they learn, especially in situations wherein access to physical resources such as money, labour, and materials were critical.
In this blog, we will discuss how the use of competitive intelligence is revolutionizing the banking sector.
The Pillars of Competitive Intelligence Adopted By Banks
Financial organizations are making use of a consistent data strategy that incorporates three fundamental pillars to make the most of competitive intelligence.
All aspects of data ownership and governance, including data processing, storage, structuring, analysis, cleaning, and monitoring, are a part of data management. In order to maximize the use of data in the next two pillars, it’s imperative to ensure that you have an efficient architecture in place, which includes cloud and on-site servers. Moreover, you need to ensure that you integrate CBS, CRM, and other frameworks, and you should employ a dedicated data unit.
Reporting and Visualization
Reporting and visualization is the next fundamental pillar that uses the first pillar to establish a comprehensive and intelligent understanding of the organization’s current state. Using this pillar, different types of reports and dashboards allow business managers to control the performance of the bank, portfolio quality, employee productivity, and other categories required to drive the organization.
Data analytics are the most complicated yet important aspect of a competitive intelligence strategy, but it provides the highest investment returns if done right. Banks develop analytical models to predict consumer behaviour, better understand their tastes, and handle the overall company proactively.
A consistent data strategy across the three pillars will help banks recognise gaps and prioritize initiatives to improve data usage. To master these pillars and make the most competitive intelligence, more banks are seeking professional competitive intelligence consulting.
How The Banking Sector Benefits From Competitive Intelligence
Forecasting Consumer Trends
In today’s mobile world, each of us produces a ton of information that, when combined, can make it possible to predict future customer behavior with a precision that was previously impossible. A study published in the Harvard Business Review found that there were over 12.4 billion debt and credit transactions in a year, which further proved that the consumer spending growth was decreasing. Based on this analysis, companies are able to make changes to their strategies and create relevant campaigns and messaging for their target audience.
Improving Marketing Effectiveness
The more you know about your client base, the easier it is to attract and serve more clients. By analyzing personal information like age, gender, income, and location, banks can attract more relevant audiences who are more likely to respond to their marketing activities. Moreover, this data can be further enhanced with insights derived from web analytics tools like Google and Facebook, thereby ensuring your ad campaigns are more targeted. In addition, banks can recognize weak spots and allow marketing, sales, and IT to work together to enhance their performance by restructuring their customer onboarding experience.
Increase Customer Retention
If your goal is to grow and expand your business, it’s imperative for you to retain and maintain your existing customers. By finding areas for change in customer experience, competitive intelligence can really help banks retain their existing clients. For example, a renowned bank in Europe adopted machine learning to determine when existing customers are most likely to look for other banking options. This helped them to build targeted campaigns that reduced their attrition by 15%.
For cybercriminals to do the most harm, all they need are your bank details. Furthermore, banks too often fall prey to cyber hacks, as they have access to thousands or millions of individual accounts. This means that even small banks are constantly being bombarded with increasingly complex cyber attacks that attempt to take advantage of any vulnerability. However, by analyzing the traffic on their platforms, banks can ensure they reinstate cybersecurity measures to effectively protect their interests.
Modelling Credit Risk
Based on a number of variables, including balance sheets, cash flow statements, and credit ratings, credit decisions have historically been made. While this system works fine, banks could further improve their performance if they could analyse more risk factors. Hence, by accessing data related to spending habits, income stability, and other factors related to customers, banks will be able to accurately determine creditworthiness.
To ensure the growth of any organization, it’s imperative for the management to be able to make quick yet effective decisions. In such situations, they should be able to understand the data and derive actionable insights without any hassles. The best way to achieve this is through visual dashboards that highlight the data’s main pointers, enabling the management to understand the information and make decisions within minutes. Fortunately, there is no lack of powerful tools for business intelligence that will help you move beyond basic spreadsheets into visualisations that make it easier to absorb details.
In the years following the 2008 recession, regulatory costs have risen sharply, outpacing profit growth for banks. As a consequence, maintaining compliance more effectively is a primary concern for many financial institution executives. Business intelligence can make regulatory enforcement simpler by helping to capture, analyse, and compile data.
By using competitive intelligence, banks can better understand how time and resources are allocated in their company. This data can then be used to set departmental budgets and staff targets, as well as to decide what kind of continuing training will be most useful for productivity and performance enhancement.
Banks have very large volumes of customer data and transactions, such as bank ledgers, transaction history, and channel traffic, documented in their systems. Furthermore, rapid economic digitalization provides numerous external data sources that banks can use, such as mobile carriers, geospatial data, credit bureaus, social networks, and online behavior. Many banks have already started leveraging the best potential for such data, while others are still designing the right data strategies.
Early adopters of big data analytics are gaining important advantages over their competition, according to a recent Bain & Company survey. To be exact, early adopters are more likely to be part of the top 25% of their industry and make decisions to improve their performance faster, thereby enabling them to execute their plans effectively.
There’s no doubt that business intelligence will keep enhancing and advancing banking’s face through various activities, including finding better security alternatives, streamlined ways to ensure companies are adhering to regulation, and even doubling the revenue. Hence, to stay ahead of your competition, you should consider collaborating with a competitive intelligence firm that will help you develop the best strategies and enable you to always stay one step ahead.
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