Diving below the water line: How financial institutions can strategically leverage SKU-level data

Illustration by: Sensibill

4 minute read

Concerns around public spaces and shared surfaces are expected to linger from the pandemic, permanently altering branch banking and solidifying digital as the leading touchpoint. For the first time, I’ve seen institutions spend advertising dollars to promote digital banking instead of offers like mortgages or auto loans – they understand that we’re on the precipice of a critical shift. With this adjustment to digital comes challenges and opportunities in many notable areas; one of which is how financial institutions learn about their customers’ goals, preferences and needs. Customer information that was once gathered through in-person conversations over the teller counter must now be collected in the digital domain.

Aside from face-to-face interactions, institutions have historically relied upon surface-level data like demographics, channel usage and transaction history to know their customers. These data points can’t paint a full picture of who a customer is and what their financial needs really are. This issue is exacerbated as the move to online shopping and e-commerce makes purchases largely homogenous – consider how many Amazon and Uber Eats receipts will appear on card statements this month, divulging little to nothing about the purchaser. It’s time for banks and credit unions to dive below the water line to learn more meaningful information, such as customer preferences, brand loyalties, life stages, and timely financial needs.

Alternate, contextual data points are needed to fill in the glaring blanks. Having access to SKU-level data – understanding not just how much was spent but details about what was purchased – can enable more personal, timely service and help financial institutions secure their relevance in customers’ lives. SKU-level data can also uncover patterns that help banks and credit unions identify segments that have traditionally been underserved, such as the gig economy and microbusinesses. For example, frequent trips to the gas station might indicate an Uber driver, or recurring large office supply purchases might signal a self-employed entrepreneur. These groups often hide in consumer accounts, but their needs are more sophisticated. Deeper micro-segmentation creates more relevant cross-sell opportunities and opens the door for new, more narrow categories of customer profiles. Such efforts are especially important now, as these groups have been hit hard by the pandemic and need catered financial tools and advice.

The race to better know and understand customers is on. As face-to-face interactions dwindle, bankers must dig deep to find new ways to provide value within digital channels. Delivering personal, relevant interactions and offers at the right time can preserve customer loyalty and enable banks and credit unions to continue doing what they do best: serving their communities. For more on the importance and benefits of leveraging contextual data to provide a better customer experience, check out my recent article inBAI Banking Strategies.