When I was a vice president of marketing at a mid-sized financial institution, we used market research analytics to help determine what customers wanted so we could develop financial products that would be attractive and useful for them—but we never had the budget or the resources to compete with large financial institutions that had highly talented marketing and IT staffs.
We compensated for this by “getting out into the bushes” so we could really know our customers, and the personalization of service paid off.
But in today’s highly digitized world, many of these older “handshake” methods aren’t as effective. There are customers who never come to a bank and who manage all their business online.
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Digitization has been game-changer for financial SMBs because they now must compete against the financial bigwigs on expensive digital platforms. This includes being able to use artificial intelligence and analytics—so how do they do it?
The answer might well rest in the cloud, where technology firms are rolling out insights-as-a-service offerings that enable smaller financial institutions to obtain analytics and AI on a pay-for-use or subscription basis. Access to cloud services like this helps level the analytics playing field and solve one critical problem for financial SMBs: They don’t have to hire internal AI and analytics talent they can’t afford.
“The goal is to provide insights based on what is actually happening in a financial institution and enrich the data for predictive analytics,” said David Cieslak, chief data scientist at Aunalytics, a data platform company that delivers insights-as-a-service. “This enables mid-market financial institutions, such as community banks and credit unions, to use data in a powerful way to enhance their personalized services to better compete against Fortune 500 banks.”
There are several ways analytics help smaller financial institutions.
- It can help them design and deliver new products to customers.
- It can improve the quality of loan portfolios by delivering insights on loan applicants that may not be visible in standard loan applications, thereby improving the quality of loans while reducing the risk of defaults.
- It can even help institutions stay in step with new regulatory compliance rules.
Auanalytics cites the example of a bank being aware of a major customer purchase from a home improvement store, which may suggest that the customer might need a home equity line of credit. Marketing can then use that information and reach out to that customer.
The outreach is predictive and not reactive. It places the institution in a much better competitive position.
What can financial SMBs do to take advantage of insights-as-a-service?
Assess where you need the AI help
Do you want to achieve better service penetration into your existing markets, or expand to new markets? Or is your primary interest in improving the quality of your loan portfolio? No one should enter an insights-as-a-service contract without a pre-defined business use case and goals.
Assess the readiness of your staff to use AI insights
An insights-as-a-service program will provide you with AI and analytics, but your own staff must be able to use and act on it. Do you have the staff on board who can capably work with the cloud services provider?
Find a good AI business partner
You want to partner with an AI and analytics firm that understands your business needs, works well with your staff and is willing to work with you on flexible contact that also includes SLAs that meet your performance and governance goals. This partner should be able to provide strong and wiling support to your staff whenever you need it. To ensure that you find the best partner, plan to issue an RFP that specifies everything that you need, take the time to thoroughly interview and vet each vendor and check references with existing customers of the vendor.
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