How leading banks use data and optimization for growth

Daniel Boltinksy on March 16th 2022

Kameleoon and Segment recently hosted a webinar that brought together CX experts from their companies and Speero, and an analyst from Forrester Consulting. Together, they dug into the challenges and opportunities for financial services companies to leverage their data.

This article presents five key insights from the webinar How Banks Use Data and Experimentation for Faster Growth. We also offer a bonus insight for retail banking marketers and developers who aren’t sure where to start their own CX experimentation.

Market Analysis From Forrester Highlights Opportunities for Those That Figure Out How to Use Data

Ryan Skinner of Forrester Consulting set the stage with an analysis of data-driven optimization in banking today. Forrester drew from existing research that showed insights-driven businesses are five times more likely to show high growth levels than their competitors, no matter the sector.

Forrester then surveyed business leaders from retail banking and the wider financial services sector. They found that 80 percent of respondents knew how important data and experimentation were. The ways they wanted to use data broke out into three main categories:

  • They wanted to improve customer experiences.

  • Improve the ease of use of their digital services.

  • And foster a positive emotional state when customers engaged with their services.

Insight #1: Retail Banks That Practice CX Optimization Grow 3.2x Faster than Competitors

Banks that regularly practice CX optimization have been shown to grow at a rate 3.2 faster than their competitors. The question is, how to do it?

While 80 percent of respondents in that Forrester knew how important data was, only 20 percent actually felt confident that their businesses knew how to apply data-driven insights. Some had concerns about privacy given the tight regulations on customer data in financial services. Others were concerned simply with the volume and velocity of data.

Insight #2: Start With A Data Governance Strategy

For banks that aren’t sure where to start with CX experimentation, Ryan Skinner suggested first establishing a data governance strategy following the POST method popularized by Forrester, which stands for People, Objectives, Strategy, and Technology.

He noted that too many organizations start the wrong way by acquiring analytics tools first without any plan to use them. In the POST model, a bank would start by understanding the people it is marketing to. Who are your customers and prospects, really? Then set your objectives for experimenting and the strategy you’ll use to achieve those objectives. Only once that plan is in place should you look for the technology and other resources you need.

Insight #3: Use Data the Right Way and Start at the Bottom

If you lack a proper data governance strategy, not only are you more likely to purchase the incorrect technology, you’re also more likely to start with the wrong kind of experimentation. For example, by attempting experimentation that is too complex to be meaningful right out of the gate.

Start simpler. As a guiding principle, leading banks rally around the customer, not their products or marketing messages, Edgar Spongolts from Speero pointed out. So figure out what matters to your customers the most using some entry-level testing. With the right tools in place, banks can take advantage of some low-risk, high-reward experimentation using nothing more than some A/B tests that collect anonymous user data.

Focus on your core customer and think about simply what they want to do in your bank’s digital services? Next, use data to validate that hypothesis, conduct a basic A/B test, and then use collected data to validate that your optimization resulted in higher conversion.

You don’t need to scale up complexity right away either, Spongolts pointed out. Instead, take what you’ve validated in your entry-level A/B testing and apply those optimizations across your site. Don’t stick to one landing page or service portal. Instead, improve that core customer’s experience everywhere.

Insight #4: Regulatory Compliance and Optimization Are Not Mutually Exclusive

Spongolts and Collin Crowell of Kameleoon emphasized that banks aren’t forced into a binary choice between data compliance or CX experimentation. You can do plenty of valuable experimentation with first-party anonymous and pseudonymous data using the right tools. Frontend A/B testing, multivariate testing, and rules-based targeting can all yield valuable insights into customer behavior and interests.

Insight #5: A Customer Data Platform (CDP) Helps Banks Put Customer Data to Good Use

Josh Couper of Segment also recommended that banks looking to start experimentation begin with governance, but he had a particular recommendation for how to go about it. In Couper’s experience, many banks with immature governance models have their tools connected through a disorganized network of point-to-point connections. So instead, he recommended banks develop a “hub and spoke” model of data management, which will make experimentation easier, especially if they manage it through a Customer Data Platform (CDP).

Couper noted this would help address many banks' concerns about collecting insights from high-volume and high-velocity data. In addition, structuring and segmenting your customers will allow insights to surface from what was previously a disorganized stream of data.

For example, a bank could combine Segment and Kameleoon to define and segment audiences. Then they could personalize customer journeys through the bank’s services. Then, using first-party anonymous data, conduct a simple A/B test on one of their hypotheses.

The example Couper considers is what would happen if you showed a user with an incomplete credit card application an option to resume that webform the next time they visited your site? Would that convert more customers?

Bonus Insight: When in Doubt, Practice Customer-centricity

We wanted to highlight one additional insight Collin Crowell offered to banks still unsure how to get started with CX experimentation: when in doubt, make your decisions customer-centric.

“Be a FAQ killer,” as Crowell put it. Aim to collect insights that will head off the kinds of questions your customers would normally go to a FAQ or your call center for. Don’t necessarily aim for marketing “wins,” aim for insights. The wins will inevitably follow when you gain high-quality insights into what your customers really want.

To Get Started with Banking CX Experimentation, Just Keep it Simple

Retail banks don’t need to dive into the deep end of the CX experimentation pool straight away. There is plenty of value to generate just by keeping it simple, working with unregulated data available today. With the right tools to help and the proper data governance models structuring how they operate, any retail bank can begin collecting the key insights they need to improve their customers’ experience and get ahead of the competition.

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