The financial services industry has become increasingly competitive in recent years, with countless institutions battling for control of a volatile market. The number of banks vying for customers is through the roof, and many consumers today tend to be fickle, jumping from bank to bank with even the slightest reason. As such, bank executives are looking to invent new ways to upgrade the customer experience and thus ensure more loyalty long-term. This begins with better security, better customer service and more mobile technology.
Largely, though, this innovation has been sluggish. Different banks have different problems with embracing innovative technologies - for smaller institutions, it's often because innovation requires money, and funds are often tied up in other initiatives. For bigger ones, the problem is bureaucratic red tape. It's difficult to make dramatic changes with a large institutions that's set in its ways.
Shamir Karkal, chief financial officer at Simple, recently told American Banker that while all banks want to bring in newer, better, technology, they're not always able to accomplish everything they'd ideally like to.
"Everybody really wants to do it, but this is one of the largest industries on the planet, and it's heavily regulated," Karkal said. "So the deep fundamental change that is really needed doesn't happen overnight."
How can big data help?
Banks want to accomplish everything, but realistically they'd be happy just to do anything. Luckily, they can use data quality and analytics to determine which goals should be prioritized. Finextra recently published research on what future innovations are most important in the financial industry.
The survey data showed that 81 percent of banks would like to add more value to transactions by making promotional offers at the point of sale, and 67 percent want to be the full custodian of their customers' assets including money, coupons and air miles. Furthermore, 43 percent plan to deploy "mobile wallets" for their customers.
Big data can be crucial in helping banks make these key decisions. By surveying their customers and gathering information on who supports each initiative - plus where they're from, how they spend their money and how loyal they've been as customers over time - financial companies can make more sound decisions.
In a previous generation, banks may have made decisions based on intuition and educated guesswork. Now, with the help of big data, they can decide based on cold, hard facts what innovations their customers need.