Big Data Can Make for Better Profits
For banks and retailers, Big Data has been touted as a way to improve service. The better records a bank has on a client’s expectations, history and overall qualifications, the more personalized service employees can offer, even if there are multiple people on one account. While providing better customer service is often an indirect way for banks to increase profits—customers will either continue business or recommend a bank to others—an article in Bank Systems and Technology explains how Big Data can also help banks increase profits in a more direct way.
For the most part, banks offer some free services to members, like checking or account transfers. However, there are some members who may be willing to pay for these services if they could receive other features for free. Members who prefer convenience and travel often, for example, may benefit more from free ATM withdrawals at non-member ATMs or mobile banking than free account transfers. With Big Data, banks can better group customers by these preferences, and capitalize on what customers are willing to pay more for.
Similar to how airlines price seats, Big Data can help banks perfect their pricing, while also helping customers pay only for the services that are most important to them.
Of course, in order to get to this point, banks and other financial institutions must also invest in the necessary data engine software and learn how to best utilize Big Data. But once companies are comfortable with this information, it’s worth it to improve service and increase profits.