Whether it’s buying groceries online, communicating with energy providers or creating new social media accounts, today’s digital age means almost all of our daily movements leave some sort of data trail.
The financial services industry in particular has excelled at offering customers new digital services for engagement and interaction.
This progressive approach has helped evolve today’s customer into someone who is trusting of their banks and open to new propositions if it can benefit them.
This was highlighted by recent research from Fujitsu which found a colossal 97% of European consumers are happy for personal data to be used to inform, makes recommendations or add value to financial services.
Today’s consumers are no longer cautious and conservative when it comes to their personal data. With high-profile data breaches making news headlines daily, it was thought that customer trust has never been so hard to come by.
Yet the research clearly finds that for either rewards and/or convenience, customers are more than happy to give up their personal data.
Here lies a huge opportunity for the banking sector to diversify its offering and futureproof its business model. But harnessing the potential of customer data brings equally large risks.
An evolving customer = an evolving business
As digital continues to reshape the business world, we are seeing key industry players offering services that once might have seemed bizarre, but are now considered “smart”.
Uber, for example, now offers takeaway delivery in its Uber Eats service. And we can order our groceries through AmazonFresh.
The financial services sector is no different. Today, there’s a huge desire for radical new capabilities and services from the industry – offering firms the chance to innovate, diversify and even transform traditional business models to create entirely new revenue streams.
According to our research, in the UK alone 36% of consumers would buy energy for their home from their bank or insurer, 32% personal data storage, 34% broadband, 32% mobile phone contract and 34% home telephone – all higher than the EU average.
We are seeing the transformation from a guarded and conventional customer, to one that is thinking outside the box, and open to new ideas and services from their tried and trusted providers.
But with great data comes great responsibility
The challenge now lies in how to grow income from such an opportunity. While the benefits of customer data might seem endless, investing in data analysis doesn’t come cheap.
How do banks determine whether the costs of investment in this growing pool of consumer data is worth the benefits it suggests?
And harnessing the power of customer data also creates a dilemma, as safeguarding more information brings added risks like cybersecurity threats.
With cyber-attacks now making the headlines daily, and 90% of major organisations suffering a breach last year, consumers are growing ever warier.
While 97% of us might be happy to share our data with banks if it is used to inform, make recommendations or add value to their financial services, almost two-thirds (59%) of consumers would switch bank or insurer if their provider suffered a security breach.
As an industry, CXOs in banking and financial services have a huge challenge on their hands: securing multi-channel environments while mitigating security risks or reputational damage.
It is paramount that the industry does not overlook or get complacent about security or place it in the “too big to fix” category. Instead it should take a proactive approach.
As part of this, financial services need to be able to spot, react and defend against a breach quickly by having a threat monitoring and detection system in place.
Banks can then be confident in harnessing customer data in a proactively secure way. And by communicating this strategy to their customers they can begin to broaden their portfolio of service offerings and add value to the customer journey.
A new pace of change
Consumers might not know precisely what the future of finance is, but their perception has shifted dramatically.
Today customers are no longer cautious and conservative – they’re thinking radically. There’s a willingness to embrace innovative capabilities and engage with the financial sector in new ways to ‘get more’, simply and more efficiently.
To cater for this, banks need to embrace this desire for innovation and utilise the data that comes with it to gather further insights. Only then will financial organisations be able to deliver the fresh, compelling services that their customers seek.
Find out more about Fujitsu’s “A New Pace Of Change” research.
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