FNBB pans for gold in customer data
Brian Benza | Friday September 12, 2014 14:12
So close to being creepy as to be mistaken as a threat.
But these were just the words of First National Bank Botswana’s outgoing CEO, Lorato Boakgomo-Ntakhwana when announcing the bank’s new strategy of peering so obviously into their customers’ spending habits to sieve out information, which could turn out to have nuggets of gold.
Faced with stiffer competition in the market that has seen the entry of seven new banks in the past nine years, FNBB realises there isn’t much room for capturing new clients.
Add to that, the other swelling pressures on most banks’ topline, including low interest rates regime, freeze of bank charges, constricting liquidity and a reduction of their traditional risk free cash cow, the BoBCs.
To mitigate the challenges, FNNB say they have adopted a new consumer centric strategy to maximise on their already existing client base by studying their transaction and spending habits to glean intelligence on what new tailor made products can be created for them.
An already widely used tool worldwide by the banking industry in the developed world, using data analytics on its over 400,000 client base will be FNBB’s next approach of boosting its revenues.
In the full year to June 2014, FNBB posted a lukewarm set of results with a marginal three percent rise in its bottom line. Already the bank with the largest market share, Boakgomo-Ntakhwana said they would be looking inward for revenue streams expansion and diversification coupled with intensifying their e-solutions services.
Possibly a magic bullet, given its already success in the developed markets, the unlimited terabytes of customer spending behaviour that the bank retrieves from consumption patterns will be key in the bank’s new strategy.
“We have realised that from the vast range of products we offer. A lot of out clients don’t even use most of them. We shall be studying our clients’ consumption patterns so that we can know what best products to come up with to suit their needs.
“From the transaction that you do we already know how much they earn, and how you use your money,” she said.
Globally, the primary source of data for analytics in banking is the information on customers and the products and services chosen by them which include fund transfers and payments performed by the customers, service requests raised by them and their preferences and interactions with the bank. Apart from traditional branch banking and Internet banking, innovations in the channel banking space, including mobile banking, have increased the amount of information available to banks.
Equipped with custody of the largest banking customer base in the country coupled with its prowess in mobile, internet and new banking technology, they will depend on what FNNB does to extract value from their clients data resources.
In introducing the latest customer targeted strategy, the CEO said the bank had trimmed its four-pronged shareholder to just focus on one stakeholder, the customer. In the preceding strategy, the bank had placed priority of three other stakeholders, which included, employees and shareholders.
FNBB director of retail, Martin Knollys told Business Week that the deriving intelligent insights based on customers’ information and banking behaviour would form the crux of their analytics as their average client only uses about 50 percent of the products that the bank offers.
“On average our 400,000 plus clients do not use 50 percent of our full products so there is a massive opportunity for the current existing customer base to offer them value for money and giving them effective and effectively solution that we already have on the shelf.
“The data analytics initiative will equip us with an understanding of our clients behaviour so that we can offer them new and old products that they are currently not enjoying,” he said.
Knollys added: “For example, about 70 percent of our customers have access to cellphone banking but the actually utilisation is a lot less. So it will be educating our clients about these products so that we can bank them right”.
Although Knollys could not divulge the exact kind of new products that the bank was working on, globally banks have used data analytics to offer clients products such as pre-approved credit cards, in store discounts and insurance services.
In other markets data analytics has been used to identify and target certain type of spenders and savers with specific campaigns and migrate customers to more appropriate products According to business technology consulting firm Infosys, global banking giant Citigroup, has more than 250 people in Asia working on data analysis. In Singapore the bank keeps an eye on customers’ card transactions for opportunities to offer them discounts in stores and restaurants.
“If a customer who has signed up for this service swipes a credit card, the system can look at the time of day, the location and the customer’s previous shopping or eating habits.
“If it finds that he enjoys Italian food, it is almost lunchtime and there is a nearby restaurant, it can send a text message offering a discount at the restaurant. That may give the bank a second transaction and a cut of the extra spending,” said the firm.
While the data analytics has proved a success for some banks, it has also attracted its fair share of criticism as banks run a risk of spooking their customers and running foul of privacy advocates by peering so obviously into people’s spending habits.