DACH banking study hot off the press: Is data really the new oil?

Surprisingly, banks in the DACH region rarely collect and update customer data systematically and use the data for personalized customer relationships. This was the result of our latest banking study conducted in partnership with the Institute for Financial Services Zug (IFZ; Institut für Finanzdienstleistungen Zug). The study looked into the question of how well DACH banks are prepared for current technological developments and challenges in customer management.

The study’s report card for banks in the DACH region is rather sobering: the authors of the study, Prof. Dr. Nils Hafner and Sophie Hundertmark, attest to an astonishingly low level of maturity in customer data management.

These are the most important results

• Management of customer data is not yet considered strategically across the board

While a slim majority of the banks have not yet given strategic consideration to the management of customer data, around one third of them plan to do so in the future. Regulatory guidelines are the greatest motivator (97%) for most banks to take on the customer data topic at all. Other reasons for banks: planning specific sales activities (72%), getting to know customers better (67%) and planning specific marketing activities (69%).

• Absence of a 360° customer view – online behavior as a blind spot

Banks are often not yet able to display and evaluate their customers’ behavior comprehensively based on data. Digital and physical contact points are weighted differently: Many banks record their customers’ (payment) behavior in writing or systematically, yet do not supplement it with their customers’ online behavior. But it is precisely a digital customer profile that is a prerequisite for relevant services and personalization.

• Infrequent measurement of customer data quality

52% of the surveyed banks have three to six employees dedicated exclusively to customer data management. Nevertheless, most banks do not check the currency of their data regularly. Only 8% of respondents check the data automatically and in real time when a change occurs. In addition, many financial institutions have no way of determining for all their customers whether customer information such as relationship status or the number of children changes. This is a missed opportunity, because it is precisely these changes in a customer’s life cycle that offer the best reason to sell financial products.

• Survey of customer value is mostly still past-oriented

Most of the surveyed banks also used classic methods to measure customer value: The calculation is usually based on customer contribution margins, thus a past-oriented view. In contrast, scoring models could provide forecasts for an inflow or outflow of financial resources, any cross-selling of an additional product category, or even likelihood of defection.

• Internal resources are expandable

Most banks (69%) use a classic core banking system to store customer data; more than half (56%) maintain a CRM system that facilitates the storing of customer data, especially with regard to customer history. Local solutions such as Excel spreadsheets (10%) are actually still common among bank advisors and make sustainable learning strategies for customer relationships more difficult. Overall, internal data management resources at the banks participating in the study appear to be expandable, both in terms of the number of staff available and the technologies used.

My conclusion

It is no longer sufficient in the digital age to limit your data collection to your customers’ channel usage and their transactions. Rather, this data should be enriched with a digital customer profile and made available to sales, customer advisors and marketing. Having an understanding of which campaigns reach your customers and the customer’s feedback on online touchpoints helps to significantly increase the effectiveness of future campaigns and optimize the use of resources.

What are your thoughts on this? I look forward to the exchange with you!