It is now more than a decade since the world was plunged into a financial crisis, but banks and other financial institutions are still struggling to rebuild the public’s trust. In trying to change how people think about the financial industry, businesses are now looking towards fintech for opportunities to improve public perception — such as building effective data management processes.
Why the Need for Good Data Management?
In the financial sector, companies gather a lot of personal information about their customers. As a result, banks and financial institutions have a significant amount of responsibility when it comes to managing this data. Not only can it help to offer customized services, but robust data management can also ensure a seamless experience and ensure regulatory compliance.
The Challenges of Data Management
One significant challenge for financial institutions is protecting data from hackers and fraudulent activities. It can cost financial services firms as much as $18m to deal with a cyber-attack. More importantly, any data breach has a serious impact on trust. Advances in fintech mean newer data management systems are much better equipped to prevent any breach.
While data can be an asset to businesses in the financial industry, it is worthless if it is not correct. A third of customer or prospect data held by financial institutions are considered “inaccurate in some way”, according to Experian research. This is where a proactive approach to data management can enhance overall service delivery and customer experience.
It is also important to remember that, in the EU, the introduction of GDPR highlighted the need for improved management of data to avoid any penalties and strengthen customer trust.
Data Management: The Opportunities
The responsible management of customer data will help the financial industry to build trust with its customers, but there are other opportunities to emerge. Using and analyzing the data you hold can create a seamless experience between multiple touchpoints. A 2018 report from Forrester revealed that customer advocacy was a significant driver in loyalty towards a financial services firm.
Data can also be used effectively to tailor services and products to an individual. Businesses will find that customers are willing to provide personal information in return for advice and benefits that are reflective of their needs. Ultimately, this can only be achieved if that data is managed in an effective manner. In terms of customer trust and retention, data management has a central role to perform.