Retail Banking

Retail Banking

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Consumers and data: a love / hate relationship

As consumers in the 21st century, we almost have a continuous dialogue with businesses around us through the medium of our mobile phones, tablets, and computers.  This is an unparalleled opportunity to use customer data, giving businesses the chance to deliver unique and personalised shopping experiences.

Customers are more likely to see and buy products that they are interested in, and businesses boost their sales. Although this seems like a win-win situation, just how happy is this relationship?

The storage of customer data comes with the serious new threat of data security. This was publicly played out recently during the October 2015 data breach at TalkTalk, which affected 157,000 customers. In addition to the fear felt across the nation, just over 15,000 people had their bank account numbers and sort codes stolen. The company itself felt the ramifications instantly as its share price dropped 10% in a single day.

Beyond financial implications, there is the issue of damage to the trusted relationship with the customer. People are increasingly cognisant of how much information is about them online and accessible through services they use. They’re less likely to be attracted to a company with a history of compromising their safety.

Financial services firms will always remain a key target due to the potential value of the data they hold. For a would-be Butch Cassidy of the cyber world, stealing a customer’s financial details is far more lucrative than say a customer’s contact details which they could obtain from a consumer products company’s database. Banks are natural targets, and this is unlikely to change any time soon.  

To prevent this, good practice includes financial services firms pro-actively keeping their data security procedures ahead of the curve by identifying future threats and actively educating customers on risks they face. Current security procedures use customer knowledge, high levels of encryption, and each company taking responsibility for security with third party suppliers. With criminals likely to aim for where the money is, security and reliability are increasingly becoming key factors customers use to discriminate which financial firms they interact with online.

However, things are not all doom and gloom between customers, data, and businesses. In many ways the relationship is in fact flourishing!

Businesses are harnessing customer data to enhance marketing capabilities and personalise the user experience. Research has shown companies that put first party customer data at the centre of marketing and sales decisions see an increase of 15-20% in the return on investment.  Through live data, such as location and products browsed, businesses can now use real-time consumer insights to tailor the shopping experience. Personalisation is what people now want: 73% prefer to do business with brands that use personal information to make offerings more relevant to them.

Single sign-on through social media is one of the new drivers optimising the use of customer data. Not only do companies like Facebook and Google+ have rich data about our demographics, location, connections and interests, they also bypass the tiresome registration procedures that users are increasingly reluctant to sit through.

By removing the password fatigue, single sign-on frees consumers to reap the benefits of getting where they want far quicker. On top of this, users also feel safer and more confident due to their identity being authenticated and verified with a source they already trust (e.g. Facebook – a third party which many customers interact with on a daily basis). Finally, the relationship is taken to a new level when social media allows the customer to “like”, “share”, and “comment” on the purchased product and business brand. This generates further traffic from other people who can similarly easily login and shop for what they want. The love has been spread.

As we move into the future, there will likely be further integration of social media and personalisation of the customer experience. A high street bank may have a current account customer that has recently tweeted at a car manufacturer about one of their latest models.

If the customer’s social media account is integrated with their identity at the bank, the bank can proactively contact this customer to offer a bespoke finance package to buy this car. The customer tweets again, and the rest is history. The customer gets a tempting finance offer tailored to their individual demands and the bank is able to sell products with more precision and more success – a win for both partners in the ‘data relationship’.

To many consumers, a financial institution having access to our personal data and preferences from our social media may seem highly invasive. But if financial services firms are able to build trust in their ability to safeguard data, they can begin to ‘normalise’ the increased capture of data ultimately benefitting both customers and the firms themselves. If you were to tell someone 20 years ago about the extent of ‘acceptable’ data capture today, they would likely be shocked.

As technology and social preferences change even more in the future, how will customers 20 years from now view the security of their data?

About the author

Phil Smith
Phil Smith
Phil is an Associate Consultant within the Business and Technology Innovation team. Prior to joining Capgemini, he worked for a global consumer electronics company as part of his degree in Mathematical Sciences at the University of Bath. He has consulting experience with public sector and consumer products clients and has a particular interest in how companies use data to engage with customers.

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