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Harnessing the True Power of Data
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Harnessing the True Power of DataFind Out How Financial Institutions Can Leverage Big Data to Better Understand and Transform the Customer Experience.
E B O O K
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Table of Contents
Introduction 3
Big Data Advantage #1: Drive Product Innovation 4
Big Data Advantage #2: More Effective Targeting 6
Big Data Advantage #3: Customized Advice 8
Big Data Advantage #4: Increased Insight 10
Big Data Advantage #5: Mitigate Risk 12
Problem #1 with Managing Big Data: Inefficiency and Redundancy 14
Problem #2 with Managing Big Data: No Centralized Data Repository 16
The Future is Data Intelligence 18
Envestnet | Yodlee Data Intelligence Brings Data to Life 20
Envestnet | Yodlee Transaction Data Enrichment 22
Envestnet | Yodlee Risk Insight 23
Envestnet | Yodlee Income Prediction Model 24
Conclusion 25
© 2016 Envestnet | Yodlee.™ All rights reserved. Technology protected by one or more U.S. Patents or Patents Pending. Use subject to license terms. May include materials developed by third parties. Yodlee and the Yodlee Logo are trademarks or registered trademarks of Envestnet | Yodlee in the U.S. and other countries. All other trademarks mentioned in this document or website are the property of their respective owners.
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Introduction
Most financial institutions today have access to reams of customer data and billions of consumer data points. While this data could serve as a significant competitive advantage and enable financial institutions to generate insights that deepen customer relationships, research indicates that financial institutions are not using their data to its fullest advantage.1 In this eBook, we’ll explore the benefits financial institutions can gain from leveraging their data, the barriers to successful usage, and how financial institutions can use data intelligence to transform the customer experience.
“Less than half of banks analyze customers’ external data…and only 29 percent analyze customers’ share of wallet.”2
1 BeBeattie, Craig, and Bob Meara. “How Big Is Big Data?” How Big Is Big Data? April 3, 2013. http://www.celent.com/reports/how-big-big-data. 2 “Big Data Alchemy: How Can Banks Maximize the Value of Their Customer Data?” Capgemini Consulting. 2014. https://www.capgemini-consulting.com/resource-file-access/resource/pdf/bigdatainbanking_2705_v5_0.pdf.
Harnessing the True Power of Data
Big Data Advantage #1:
Drive Program Innovation
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Financial institutions with access to simple and accurate account and transaction data can leverage critical consumer data points to more accurately understand spending trends and ultimately drive successful product innovation. Harnessing account and transaction data also enables financial institutions to create new, engaging, and profitable programs and services that meet real-time consumer demand—regardless of how customers choose to interact with their financial institution.
“Within every financial institution’s vast data universe of customer interactions, transactions, behavioral quirks and purchase history lays a treasure trove of insight that can help organizations quickly zero in on customer pain points, problems, opportunities, and goals.”3
3“How Big Data Can Build Trust in Banking.” The Financial Brand. January 5, 2015. http://thefinancialbrand.com/47900/big-data-banking-trust-experience/.
Harnessing the True Power of Data
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Harnessing the True Power of Data
Big Data Advantage #2:
More Effective Targeting
Harnessing the True Power of Data
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Consumer data that includes usage trends, details on branch visits, and customer communications and requests can help financial institutions target customers most receptive to cross-sell and up-sell opportunities—and also zero in on those consumers who might be unsatisfied with their current banking experience or product mix. By understanding customers’ daily financial and non-financial needs, financial institutions can begin to match individual customers’ needs with relevant suppliers delivering relevant offers and promotions across the consumer lifecycle—placing financial institutions at the center of their customers’ everyday lives.
By leveraging existing and historical consumer data, financial institutions can target consumers at the individual level and foster a more custom and personalized experience.4
4 Marous, Jim. “Differentiation in Banking Requires Better Data Insights.” The Financial Brand. March 24, 2015. http://thefinancialbrand.com/51081/banking-big-data-opportunity/.
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Harnessing the True Power of Data
Big Data Advantage #3:
Customized Advice
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ADVICE
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“Smart, personalized guidance is one of the best ways to sell more products and services. Why? Because focusing on someone’s individual needs builds trust.”6
5 Bradley, Joseph, Jeff Loucks, Paul Jameson, Kathy O’Connell, and Joel Barbier. “Reimagining the Digital Bank: How U.S. Banks Can Transform Customer Interactions To Increase Profitability.” Cisco.com. Accessed June 8, 2015. http://www.cisco.com/c/dam/en/us/solutions/collateral/executive-perspectives/Internet-of-Everything-executive-summary.pdf.6“How Big Data Can Build Trust in Banking.” The Financial Brand. January 5, 2015. http://thefinancialbrand.com/47900/big-data-banking-trust-experience/.
A recent study revealed that 43 percent of U.S. banking customers believe their financial institution does not know them and is not helping them reach their primary financial goals.5 Financial institutions can turn this situation around by leveraging the customer data they have on hand to get more personal with customers and provide the personalized advice their customers are seeking—in both a digital format and in face-to-face transactions. Financial institutions that effectively use data, analytics, and tools can strengthen their relationships with customers, deepen customer engagement, encourage sound financial habits and behaviors, and increase potential revenue opportunities.
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Harnessing the True Power of Data
Big Data Advantage #4:
Increased Insight
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The big task for financial institutions is to use consumer analytics to understand what makes their customers really tick and serve them in a proactive and predictive way. Because customers are not as loyal to their financial institutions as they used to be, it’s more important than ever for financial institutions to access and analyze their financial, account, transaction, and consumer data to gain an unparalleled understanding and transparency into what’s needed to attract and retain the new generation of banking customers.
“The power comes in knowing how to synthesize this data, both so that financial institutions can respond to customers and customers can respond to financial institutions.”7
7 “How Big Data Can Build Trust in Banking.” The Financial Brand. January 5, 2015. http://thefinancialbrand.com/47900/big-data-banking-trust-experience/.
Copyright © 2016 Envestnet | Yodlee.™ All rights reserved.
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Harnessing the True Power of Data
Big Data Advantage #5:
Mitigate Risk
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8 Mills, Karen Gordon, and Brayden McCarthy. “The State of Small Business Lending: Credit Access during the Recovery of How Technology May Change the Game.” Harvard Business School. July 22, 2014. Accessed June 24, 2015. http://www.hbs.edu/faculty/Publication%20Files/15-004_09b1bf8b-eb2a-4e63-9c4e-0374f770856f.pdf/.
“Based on regional survey data from the Federal Reserve Bank of New York, about 37 percent of small businesses apply for credit…over 40 percent either received no capital at all or received less than the amount they requested.”8
With a powerful enhanced data solution, financial institutions can make better business decisions and reduce risk for small business customers. Gleaning critical business income and spending insights enables financial institutions to leverage data driven analytics to better inform and evaluate a small business borrower’s credit risk. Bank account information such as account ownership, deposits, transaction details, and balances can help financial institutions assess affordability for the business and increase conversions, loan approvals, and profitability, while reducing the possibility of loan risk and defaults.
Harnessing the True Power of DataHarnessing the True Power of Data
Problem #1 with Managing Big Data:
Inefficiency & Redundancy
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31 percent of banking executives surveyed said their company’s current systems inhibited their ability to quickly respond to customer and market insights.9
Since the advent of personal financial management and financial planning software, the challenge of managing data entered into these systems is becoming more of a burden to both the consumer and the financial institution. Many innovations in financial services run independently of each other, with little if any of the data flowing between services, forcing users to interact with each software platform independently—and often redundantly. A data management solution that delivers an integrated platform combining aggregation services, digital financial services, and direct data feeds is an ideal solution for consumers.
9 “The Deciding Factor: Big Data & Decision Making | Resource.” Capgemini Capgemini Worldwide. Accessed June 22, 2015.https://www.capgemini.com/resources/the-deciding-factor-big-data-decision-making/.
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Harnessing the True Power of Data
Problem #2 with Managing Big Data:
No Centralized Data Repository
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As software is becoming more integrated, there soon will be a need for a single centralized data repository for financial institution customers and financial institution executives to manage their practices and monitor key performance indicators, and a single portal for customers to effectively manage their personal financial information. The opportunity that comes from integrations is not merely to eliminate the redundant data entry across the platforms, but actually to increase efficiency of managing the ongoing data demands in a secure manner, creating a more seamless and personalized customer experience.
“…Early-stage fintech innovators need the support of large established banks as much as those large organizations need the startups’ new ideas.”10
10 Skan, Julian, James Dickerson, and Samad Masood. “The Future of FinTech and Banking: Digitally Disrupted or Reimagined?” Web. 18 May 2015. http://www.fintechinnovationlablondon.co.uk/media/730274/Accenture-The-Future-of-Fintech-and-Banking-digitallydisrupted-or-reima-.pdf/.
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Harnessing the True Power of Data
The Future Is Data Intelligence
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Over 90 percent of financial institutions believe that successful data initiatives will determine the winners of the future.11
11 “Big Data Alchemy: How Can Banks Maximize the Value of Their Customer Data?” Accessed June 22, 2015.
With highly integrated big data platforms quickly becoming the norm in banking, the ability to access and analyze high-quality financial, account, transaction, and consumer data is the rapidly approaching future of digital financial services. Today, aggregation services and innovative digital financial services software allow access to direct data feeds and create the opportunity for automated and continuous workflow through centralized data initiatives that drive growth and innovation and deliver more personalized and predictive banking experiences.
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Harnessing the True Power of Data
Envestnet | Yodlee Data Intelligence Brings Information to Life
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Built on over 15,000 global financial data sources, the Envestnet® | Yodlee® Financial Data Platform enables consumers to leverage transaction-level data to deliver unique data insights and power mass personalization opportunities for financial institutions. And now, with the new Envestnet | Yodlee Financial Data Solutions, financial institutions can query aggregated transaction-level data from bank accounts, investments, bills, credit cards, and more. Leveraging the solution, financial institutions can also deeply analyze consumer and small business segments and create highly customized programs and offers that meet real-time customer demand. From acquiring customers and deepening relationships to mitigating risk, Yodlee Financial Data Solutions can help financial institutions harness the true power of their data.
“The evolution of digital financial services that harness personal financial data, automation technology, and behavioral science to deliver personalized and predictive solutions will help consumers be more proactive instead of reactive based on their personal financial interests, tendencies, and trends.”Anil Arora, CEO, Envestnet | Yodlee
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Envestnet | Yodlee Transaction Data Enrichment With Envestnet | Yodlee Transaction Data Enrichment, banking, credit card, and debit card transactional data is enriched with the merchant’s name, a simple description, and category, enabling financial institutions and their consumers to easily identify and evaluate these transactions. The categorized and contextualized data can be leveraged to create more relevant and targeted offers, derive insights from spending trends, reduce consumer chargebacks, and improve the overall customer experience.
Yodlee Transaction Data Enrichment is available through Envestnet | Yodlee’s fully hosted applications and APIs, and can also be delivered through a DaaS file-to-file method to enrich a large or small set of transactions from multiple disparate systems on an intraday, daily, or semi-regular basis.
“Yodlee Transaction Data Enrichment service provides richer data and deeper insights into spending behaviors and trends to enhance marketing and digital customer experiences.”John Bird, SVP Product Marketing & Alliances, Envestnet | Yodlee
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Envestnet | Yodlee Risk Insight Envestnet | Yodlee can provide data elements at the transactional level mined from big data with a focus towards reducing credit losses for financial institutions. Providing this insight, Envestnet | Yodlee Risk Insight enables small business lenders to make critical strategic business decisions by seamlessly accessing bank account information—account ownership, deposits, transaction details, and balances—to help them evaluate a small business borrower’s credit risk profile.
Envestnet | Yodlee Income Prediction Model Envestnet | Yodlee Income Prediction Model uses consumers’ bank and/or credit card transactions to predict income with over 90 percent accuracy—mirroring US census data—enabling financial institutions to better understand and better predict consumer behavior. This solution is easily integrated into a financial institution’s framework and can be applied to transactions in real-time to forecast income category or in a batch mode.
“Banks that make full use of the data they already have will be able to go beyond credit scores to gain deep insight into potential borrowers’ financial situations.”Terrence McKeown, Practice Manager Credit Analytics, Strategic Initiatives, Envestnet | Yodlee
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Conclusion
As consumers demand more from their financial institutions, financial institutions need to develop strategies that will leverage data to better understand and serve customers at all stages of their financial lifecycle and in all channels. By capturing, contextualizing, and using consumer insights from data, financial institutions can build new customer relationships and solidify existing ones, improve products, services, and programs, enhance the consumer experience, and ultimately, increase loyalty and revenue.
How can I learn more?
• View the webinar: “Increasing Customer Engagement Through Big Data Analytics”
• Download the data sheet: “Envestnet | Yodlee Financial Data Solutions”
• Download the data sheet: “Envestnet | Yodlee Transaction Data Enrichment”
• Download the data sheet: “Envestnet | Yodlee Risk Insight”
• Download the data sheet: “Envestnet | Yodlee Income Prediction Model”
For more information, visit: www.yodlee.com.
Global Headquarters: 3600 Bridge Parkway, Suite 200, Redwood City, CA 94065T: +1 650 980 3600, www.yodlee.com
© 2017 Envestnet | Yodlee.™ All rights reserved. Technology protected by one or more U.S. Patents or Patents Pending. Use subject to license terms. May include materials developed by third parties. Yodlee and the Yodlee Logo are trademarks or registered trademarks of Envestnet | Yodlee in the U.S. and other countries. All other trademarks mentioned in this document or website are the property of their respective owners. Yodlee 619 03/17
