Small banks, big data - a winning combo

By Folake Dosu  |  October 26, 2018

community-banks-big-data

A recent Celent study found that people banking with smaller institutions are significantly more likely to recommend their bank or credit union to a friend or colleague than customers at larger banks. Yet community banks struggle to remain competitive going up against multinational banks stacked with the resources to find and act upon consumer insights. 

Banks of all sizes inherently have plenty of data at their disposal, says Computer Business Review, and these smaller banks better their chances when using big data for customer segmentation, personalized marketing, risk mitigation and business optimization.

Data on spending habits and banking needs, for example, could offer a way for small banks to segment customer groups. Customer segmentation would enable small banks to provide more relevant offerings and accurately target these customers. This customer segmentation would, in turn, pave the way for more personalized marketing efforts, such as using demographic data to tailor advertising to age and income groups likely to be exploring mortgage rate options.

Big data is also a huge plus for risk mitigation. Automating credit risk testing using big data software solutions cuts costs and increases accuracy. This ability to predict risk could also extend to portfolio management for individual customers.

Additionally, big data can help small banks avoid business strategy missteps and develop new services that their customer base actually want and need. Data can also be used to measure the success of new initiatives and track overall progress on business goals.

Only 30% of customers believe their banks provides personalization. Big data can significantly cut down the time needed to analyze each customer’s portfolio and help tailor stronger recommendations.

Customers can tell whether banks are taking the time to get to know them. As reported by Computer Business Review, an IBM banking study found that only 30% of customers believe their banks provide personalization. Big data can significantly cut down the time needed to analyze each customer’s portfolio and help tailor stronger recommendations.

The shift towards a digital banking experience may sway customers to big banks, but with data, small banks can enrich their current, localized offerings and keep a foothold in the market.

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