Using account holder data to make informed decisions is a smart business tactic for financial institutions. However, many decisions at banks and credit unions still rely on guesswork or intuition. Financial institutions that focus on understanding their account holders through data analytics in banking can develop better products and services, deepen relationships, and outperform their competitors.
According to Alkami’s Generational Trends in Digital Banking Study, 65% of millennials report they feel they are living paycheck to paycheck. This highlights the importance of financial wellness initiatives that address account holders’ financial status, behaviors, and attitudes.
True financial wellness programs go beyond retirement preparedness, credit repair, or debt management. They aim to change lives by improving attitudes, influencing behaviors, and increasing financial knowledge. To create impactful programs, financial institutions need to understand their account holders’ current financial status and future needs. This includes not only products they have with the institution but also those with other banks and credit unions and their spending patterns.
Access to insights from transaction enrichment allows financial institutions to understand each account holder’s financial story. Data analytics in banking helps assess account holders’ financial wellness, life stage, and priorities, providing valuable insights into the financial services they need. Financial institutions that use these insights to develop relevant services and products will earn their account holders’ loyalty.
Consumers are always connected, with devices playing central roles in their daily routines. The growing use of voice- and artificial intelligence-powered assistants shows this trend. Consumers increasingly rely on these technologies to make their lives easier, including their financial lives.
Technology not only simplifies our lives but also helps financial institutions build stronger, longer-lasting relationships with their account holders. However, this requires banks and credit unions to level up their data analytics in banking capabilities through transaction enrichment to understand and address account holders’ needs and their willingness to embrace new technology.
To offer products and services that account holders want, financial institutions need to stay informed about their account holders’ activities and preferred tools. For example, buy now pay later (BNPL) services are becoming increasingly popular. According to Alkami’s 2024 Telemetry Data Report, The High Interest Rate Environment and Its Impact on Consumers and Financial Institutions, there were 5.17x more BNPL users in 2023 than in 2019.
By leveraging data analytics in banking, banks and credit unions can provide products, services and education to meet account holders’ needs and adapt to their changing demands. For example, financial institutions seeing an increase in BNPL transactions could educate consumers about the risks and advantages of BNPL, and promote the benefits of the institution’s own debit and credit cards.
Leveraging data analytics in banking allows financial institutions to make informed strategic decisions, develop better products and services, and deepen account holder relationships. By understanding account holders’ unique financial stories and staying informed on financial technology trends, banks and credit unions can achieve stronger growth and performance in a competitive market.
Solutions that provide deep insights from data analytics in banking are essential. Alkami offers data analytics in banking technology and tools, including transaction enrichment, to cleanse and categorize billions of transactions, producing actionable insights to inform your decision making.
Make smart decisions with data analytics in banking.
Q: What types of data do financial institutions need to collect to implement effective data analytics strategies?
A: Financial institutions are already sitting on data segments like core and transaction data, but should also collect diverse data types, such as website visitor data, product usage data, and interaction data. This comprehensive data collection helps tailor financial products and services, predict account holder behavior, and enhance personalized experiences, leading to better decision-making and account holder satisfaction.
Q: How can smaller financial institutions with limited resources implement data analytics effectively?
A: Smaller financial institutions can start by focusing on essential data, such as transaction and payment data. Collaborating with TechFin companies like Alkami can also enhance analytics capabilities without significant upfront investment. Alkami’s market-leading solution for data analytics in banking combines core data and transaction data. This provides insight into account holders’ life events and financial behaviors. Alkami’s solution identifies, tags, and categorizes all of your transactions, including credit card, debit card, automated clearing house (ACH), bill pay, and more.
Q: What are the privacy and security implications of using account holder data for analytics?
A: Privacy and security are crucial to implement data analytics in banking effectively. Financial institutions must implement comprehensive cybersecurity measures and comply with regulations like General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA). Ensuring data is encrypted, anonymized, and transparently managed helps protect sensitive information and maintain account holder trust.
