High street banks are failing to properly utilise customer data, or so 90 per cent of the respondents to a KPMG survey believed. And in that failure, banks aren't managing to effectively tailor products to customer needs.
The survey was conducted amongst delegates at the 2012 International Payments Summit, and also revealed that only 5 per cent of banks plan to invest in data analytics over the next five years.
Neel Arya, director of KPMG's customer and channel advisory team, commented: "By failing to capitalise on the customer data at their disposal, high street banks are missing opportunities to enhance their customers' experience, create products and services that are relevant to customer needs and build long-term loyalty. What's more, many banks have yet to prioritise existing and emerging data from external sources such as social media.
"With the proliferation of internet banking, the growing use of mPayments and customers willingness to air their complaints across Facebook and Twitter, so much data exists which can generate significant new insights into customer behaviour, if it is successfully mined. Yet, if the traditional high street banks are too slow to make better use of the customer data on their doorstep they run the risk of losing out to new entrants in the marketplace."
The research has been published to coincide with Big Data Week (opens in new tab), which got underway in London yesterday, and KPMG found that banks face many of the same head-scratching problems other organisations do when it comes to big data.
KPMG's analysis showed that banks faced three key issues in dealing with data slurped from external sources such as the major social networks - understanding the most valuable elements of the data, and the issue of how to link that data to individual customers.
A further concern was potential bad press from sifting customer data.
Arya further notes: "It's encouraging that many within the industry accept that more should be done to leverage the potential of the information at their disposal, but worrying that so few seem prepared to invest in this area. If the focus remains on banks' centrally collected data, customer analytics will remain incomplete. The simple fact is they need to harness the data they already own, but not at the expense of ignoring new material."
"It's fair to say that many banks are faced with legacy systems which make it difficult to achieve a single customer view, but the world of data is moving so fast that inaction is no longer acceptable. Big data needs to be turned into ‘big insight' and unless it is harnessed quickly and effectively, the big banks will struggle to compete with the more customer centric and digitally literate new entrants to the market."
The survey also showed that seven out of ten respondents viewed mobile banking as a key facet in their relationship with their bank, with a third believing that mPayments are "growing quickly".