A mere 23pc of European banks today can readily access customer information on customer transactions, according to a new survey of 125 retail banks across Europe. Adding business intelligence into their networks will impact customer-acquisition strategies as well as cross-selling and new channel opportunities.
The survey, which was conducted by the European Financial Management and Marketing Association (EFMMA), the University of Mannheim and enterprise software giant SAP, describes business intelligence as a key IT focus area for European banks.
Some 88pc of European banks aim to improve data quality over the next three years.
The survey found that one third of EMEA (Europe, Middle East and Africa) banks analyse customer data on an ad hoc basis.
It found that only 11pc have a regular and consistent data mining process.
Some 89pc intend to gather data by customer segment that covers either all customer-relevant data or only some key parts such as complaints, sales visits and invoicing.
SAP says that banks realise that efforts to clearly define data into segments will have an impact on strategies for customer acquisition, cross-selling and multi-channel customer management.
Daniele Bonfanti, program manager at Financial Insights, EMEA, a subsidiary of IDC, said: “In an even more mature market, organic growth can be pursued only with the support of a more structured business intelligence process allowing banks to reach an appropriate level of information quality essential to have a deeper understanding of customer segments.
“Banks need to transform data collection and analysis in a highly flexible process to be able to really support the business decisions and initiatives and, more importantly, the need to move away from a business intelligence approach that is often too late, too slow, too rigid,” Bonfanti said.
The survey discovered that an overwhelming number of banks (75pc)favoured growth over cost cutting as their primary business strategy.
Many were making greater efforts to speed up response times. Some 61pc of survey participants said they expect to offer differentiated products and service propositions based on validated customer need by 2009, up from 12pc today.
The survey found more than one third of banks report constraints to their IT systems in achieving their strategic goals. In three years, 98pc of these banks expect IT to support their business strategies, as well as provide competitive advantages.
“Banks’ IT systems and organisational structure need to support information availability across the entire enterprise to leverage the potential of effective customer management,” said Richard Lowrie, director of banking strategy, SAP AG.
“In comparison to the results of the study conducted in 2003, the new study reveals a correlation between a bank’s business strategy and the ability of its core systems to support customer-centric business processes. For SAP, the findings confirm that our development efforts in analytical banking capabilities meet a pressing and ongoing need in the industry,” Lowrie concluded.
By John Kennedy