More Personalized Banking Services, Please

Cisco Blog Photo #4For more than a decade, banks have been talking about how customers should be able to connect through multiple channels and have a consistent experience across them. They admit that they need to break their silos and design products and processes to deliver services anytime, anywhere. In the last few years, a new dimension has emerged: how do banks leverage big data to deliver personalized services consistently in real time across multiple channels?

Today’s consumers are digital savvy, and they’ve integrated social media into their lifestyle. As such, they’ll readily take advice from strangers, and they’ll openly share information that previous generations would consider strictly private. Our world is being transformed by data and enabling technologies that can exploit it. Capturing structured and unstructured data, turning it into information and driving insights from it is a source of economic value.

According to a recent survey by Cisco, 46% of consumer respondents in the U.S. believe that banks know enough about them to offer personalized services. Even more bankers (58%) feel that’s the case. Moreover, 69% of consumer respondents would provide more private information in exchange for more personalized service, higher security against identity theft and greater simplicity in managing their finances. 63% of the consumers surveyed said simplicity in managing finances (including budgeting) is very important.

Consider this example of how a predictive financial management tool from the bank can meet customers’ needs. Let’s say you set a goal to save 10% a month. The bank can help you achieve it by analyzing all the data they have about you and your spending habits. When you walk into a grocery store, the bank can push a recommendation to you on your smart phone based on your location. This time of the month, you generally spend around $300 for groceries. To meet your budgetary goals, you need to spend no more than $270. As you’re putting items into your shopping cart, you’re also getting a running total on your smart phone.

The survey showed that 34% of consumer respondents believe receiving real-time advice that would assist with financial purchasing decisions would be attractive. And of those, half said they would be interested in receiving it based upon their actual geographic location.

Consumers want a personalized mobile/online banking experience, but they still want branches, too. As consumers have moved transactions onto virtual channels, the number of  transactions in the branch can’t support the overhead of the physical premises. That’s why banks such as Wells Fargo and Bank of America plan to launch new branch formats that are one-third of the size of their traditional branches, but still deliver the same set of services. They can provide access to remote expertise through video information walls, larger screen ATMs with video chat and wireless technology.

Technology is the enabler, but good service is the key to success. We’re talking high availability, competence and efficiency. That’s the stuff that a positive brand image and customer loyalty is made from.

Big Data Gets Smart: It’s All Semantics

Computer Tape Backup StorageLike other organizations, banks are trying to come to grips with big data: a vast amount of data coming from many sources at a faster rate. At the SWIFT Operations Forum Americas conference in March, David Saul, senior vice president and chief scientist at State Street Bank, made an interesting point. He said he thinks in terms of “smart data”, which encompasses not only volume, velocity and variety, but also value.

Big data is problematic for banks when it comes to regulatory reporting. They have to calculate and report aggregated risk positions to multiple agencies, and they’re going to spend billions of dollars annually doing it. This exercise would be easier and more cost efficient if reports could be produced in the same format and transmitted in the same way to all regulators globally.

Pulling  information from disparate systems and platforms that have no knowledge of one another is a challenge. However, banks can use semantics to connect data in one place to data in another place in a similar fashion to the Internet. Essentially, semantics allows the data from the sub-units in an organizational hierarchy to be connected along with the meaning.

To this end, the Enterprise Data Management (EDM) Council has been working to create the Financial Industry Business Ontology (FIBO). A key piece of FIBO is the Legal Entity Identifier (LEI), which uses semantics to create a common identifier for a logical entity. A few years ago, the EDM Council began a collaborative effort to turn FIBO into a standard that maps to business needs and contains the correct meanings and relationships. An outgrowth of this initiative is the Smart Regulation subgroup, which is focusing on ways to standardize regulatory reporting.

By bringing data together with the semantic models, banks can prepare regulatory reports much quicker. Once the data is brought together, it doesn’t have to be mapped again, which saves time and money. Moreover, banks can start to query the same big data to make smart strategic decisions that ultimately generate revenue.