By Xav Harrigin-Ramoutar

The financial sector is rapidly transforming, fueled largely by digitalization that is reshaping how banks operate and interact with their customers. This shift towards digital solutions is not just about adopting new technologies; it’s about fundamentally changing the approach to banking—from transactional relationships to personalized customer experiences. In this context, data-driven marketing emerges as a critical strategy for community banks aiming to remain competitive and relevant. This blog explores how leveraging data can revolutionize community banking, enhancing customer engagement, and enabling banks to offer more targeted, efficient services that meet the evolving expectations of today’s consumers.

The Power of Data-Driven Marketing

Data-driven marketing represents a monumental shift in how community banks approach customer engagement and product development. By analyzing vast amounts of data, banking providers can gain deep insights into individual customer preferences, behaviors, and financial needs. This understanding allows for the customization of services and offerings to match the unique requirements of different customer segments, transforming the banking experience into one that is highly personalized and customer-centric.

For instance, by leveraging data analytics, a bank can identify customers who may benefit from specific financial products. A young family might receive personalized offers for college savings accounts or home mortgage options, while a retiree could be targeted with retirement planning services or estate management products. Data can also reveal less obvious needs, such as a sudden interest in travel insurance if transaction data shows recent international flight bookings.

Moreover, community banks can use these insights to refine their service delivery models. For example, data might show a high preference for mobile banking among millennials, leading the bank to enhance its mobile app’s features and usability. Alternatively, transactional data analysis could help banks identify peak times for certain services, allowing them to optimize staff allocation to improve in-branch service experiences.

The adoption of data-driven strategies thus enables banks to not only tailor their products and services but also to anticipate customer needs, thereby ensuring relevance and timeliness in their offerings. This personalized approach not only meets customer expectations but also fosters loyalty and increases customer lifetime value, driving long-term success for the bank.

Empowering Community Banks with Advanced Tools

Micronotes’ Growth Opportunities Analysis serves as a powerful catalyst for innovation within community banks by equipping them with sophisticated tools to leverage big credit data more effectively. This platform utilizes analytics and customer segmentation to transform vast amounts of data into actionable insights, enabling banking providers to not only understand their current customers better but also to predict future behaviors and preferences accurately.

For example, Micronotes can analyze transactional and behavioral data to identify prospects who could benefit by consolidating their credit card debt into a home equity loan based on current rates and individual financial behaviors. Using this insight, bankers can proactively offer refinancing options to these prospective accountholders before they start shopping around.

In another scenario, imagine a community banking provider in a region experiencing significant economic growth. By using Micronotes to segment the customer base into micro-segments based on income changes, spending patterns, and saving behaviors, the bank can tailor its investment products specifically for those who are newly coming into wealth. This targeted approach ensures that the bank’s offerings match the emerging needs of its customer base, enhancing both service relevance and customer engagement.

Furthermore, Micronotes’ capabilities enable community banks to streamline operations by automating routine customer interactions. For instance, the platform can trigger personalized email or mobile notifications for routine account updates or promotional offers based on the customer’s preferred communication channel and history of interactions, thereby reducing manual efforts and increasing operational efficiency.

Through these examples, it’s clear that Micronotes not only helps community banking providers enhance their customer service but also encourages a culture of innovation by enabling banks to utilize data in new and impactful ways.

Advanced Technologies and Personalization at the Forefront

The future of community banking is poised to be shaped by the integration of advanced technologies like AI and machine learning, spearheading a new era of personalized and proactive banking experiences. In this future, community banking providers will leverage tools like Micronotes to not only understand customer needs but to anticipate them, offering solutions before customers even realize the need themselves.

Imagine a scenario where Micronotes is integrated with digital banking apps and customer management systems, creating a seamless ecosystem. This interconnectedness ensures that insights derived from one platform inform the functionalities of others, providing a holistic view of each customer. Such integration enables the delivery of real-time, personalized financial advice directly through mobile banking apps, enhancing customer engagement and satisfaction.

This visionary approach puts personalization at the forefront, where community banks can offer not just services but tailored financial journeys, making banking not only more responsive but also more intuitive to individual customer needs.

The Road Ahead: Community Banking and the Journey Towards Data Integration

The integration of data-driven strategies through tools like Micronotes represents a transformative shift for community banks. By embracing these advanced technologies, banks can enhance customer experiences through personalization and proactive service, leading to increased loyalty and competitiveness. Community banking CEOs are encouraged to view these innovations not just as tools, but as essential investments in the bank’s future. The adoption of such strategies will not only keep banks relevant in a digital age but also forge stronger, more responsive relationships with customers, securing long-term growth and success in an increasingly competitive market.

Nearly every financial institution has “deepening customer/member relationships” high on the customer relationship management priority list but, with most FIs hovering around two products per customer, not all execute well against the mandate.  Here’s what we’ve found to be the most effective methodology to deepen customer relationships.  Not surprisingly, these recommendations track well to deepening any human relationship.

Step 1: Measure your Net Promoter Score

It’s nearly impossible to do more business with customers or members who are unlikely to recommend your financial institution to a friend, colleague, or family member.  So, before you start any cross-selling initiative, measure your Net Promoter Score and verify that it’s above 40, slightly above the historical average for retail U.S. Banks.  If it’s below 40, focus on improving your score before you waste time and money asking customers or members to do more business with an institution they themselves wouldn’t recommend.  In either case, you’ll need a continuous improvement effort to move that score Northward.

Step 2: Reviews

One output from the Net Promoter interview process is the identification of “promoters”, or brand ambassadors — who enthusiastically recommend your financial institution.  About 20% of these promoters will leave a review, like a Google Review, for you, if asked.  So ask, because, these reviews can represent the bulk of your positive reviews.  See this blog for an example with the numbers.

Step 3: Measure and Prevent Churn

You can’t manage what you don’t measure so, if you want to reduce churn, typically measured as accounts closed per month, you’ll need to measure it. Once you have that measure, use predictive analytics to determine which of your customers are likely to close their account and leave the financial institution and, if they are attractive long-term prospective customers, incentivize them to establish a direct deposit relationship with you because very few direct deposit customers leave the bank.

The use of e-services, like bill-pay, mobile deposit capture, and credit card management services also reduce the probability of churn so, make sure you are continuously discussing the benefits of these free and powerful services with your customers or members.

Step 4: Surface and Serve Life Events

Most financial service acquisitions are won or lost within 90 days of a life event so, you’ll need to be continuously working to spot and service life events like buying a home, getting married, paying college tuition, or retiring.  At any one time, about a third of your customers or members are anticipating or going through a major life event and if you don’t know about it, you won’t be able to help them and the opportunity will be lost… so ask, systematically!

Step 5: Prescreen and Refinance

Americans hold over a trillion dollars in overpriced debt, that is — loans with an interest rate that is materially greater than current prevailing interest rates.  Modern automated pre-screening technology can legally find and surface mispriced debt your customers or members hold elsewhere by comparing your current lending rate to their rate and automatically presenting a firm offer of credit to refinance, including the dollarized savings tables for each customer/member, via email, mobile, and online banking thereby making it easy to lower customer or member borrowing costs.  It’s a good idea to have a continuous process for updating customer or member contact information to reduce direct mail costs to undeliverable email firm offers of credit. And don’t be shy about offering aggressive rates to touch, move, and inspire your existing creditworthy customers to refinance debt held elsewhere with you; these are net new loans!

Step 6: Accumulate Deposits

If your customer is refinancing debt held elsewhere with you, they are saving money.  So, don’t miss the opportunity to help your customers use those savings to achieve a lifetime goal by surfacing the goal and establishing an automatic deposit of those savings.  Moreover, make sure that you have a trigger program in place to spot extremely high balances in checking or regular savings accounts so you don’t miss the opportunity to keep those deposits.  Stories abound of hundreds of thousands of dollars sitting in checking or savings accounts following a home sale that just disappear to a competitor’s CD without a single ask for the deposit business by the primary bank or credit union holding the funds.

Step 7: Prescreen for New Loans

Lastly, regularly prescreen your customers for new loans and use predictive analytics to ensure that each customer who is likely to be in the market for a loan, knows that they are pre-qualified or pre-approved for the loan they are predicted to need with their primary bank or credit union.

And, don’t forget to make it fun.  Several of our clients run educational microinterviews with small prizes given to those who come up with the correct answer.  Some of these campaigns, all of which are delivered digitally (mobile and online banking, email, SMS) achieve a 30-40% click-through rate!

Shallow relationships won’t survive the inevitable mishaps of any long-term business relationship so start conversations, develop relationships, and build trust in all your relationships.