The fundamental route to efficiency is data, and analytics sits at the heart of it

The past few years have seen increased adoption of digital technologies in the industry. For instance, the rise of OTT platforms has transformed the media and entertainment sector. With digital technologies, measurement and data analytics have made it possible to influence or even drive creative thoughts.

Production houses are now altering storylines of popular shows based on viewer sentiment derived through data analytics. This has enhanced the influence of data analytics on everyday business. The world of banking is no different.

Understanding the change

To understand how banks have been impacted by COVID-19, it is important to focus on industry trends. While the banking industry has been open to cutting edge technologies (especially data security), efforts internal to operations haven’t been as fierce.

There are multiple reasons for this, but to simply put it, banking has continued to operate as a brick-and-mortar business with customer interface happening at branches.

The play of digital, at most, was limited to a cosmetic facelift where transactions were moving on to a digital layer so branch visits could be curbed to the bare minimum. While that kept consumers happy, it still was not transformational, because archaic banking processes still depended on a paper-trail.

A document moves from one desk to another, and several processes later complete the loop. What COVID-19 did was highlight the need for true digital transformation within core processes.

Pre-COVID and now

While digital banking had picked pace in global banks, especially in the Middle East, India, and other parts of the world, the COVID-19 situation has brought about a fundamental shift in approach. From a workforce point of view, it is unprecedented that bank employees work from home.

Now, although there is an element of the workforce working out of physical branches, the inflow of customers visiting branches has drastically fallen due to lockdowns across the world.

Since retail consumers were adopting digital banking, the impact hasn’t been significant. However, in more conservative circles such as SME and large-scale commercial banking, customers are increasingly depending on digital banking.

Under these circumstances, digital takes on a whole new responsibility. Not only is it critical to continue serving customers with the least disruption, it is imperative for digital to also drive new customer acquisition and boost sales for the bank.

What was earlier driven by ‘feet on the street’ must now happen virtually – albeit virtually, in an informed manner. With intelligence. The role of analytics has moved from reporting on business performance to increasingly look at internal tracking.

Team efficiency, resource utilization, customer satisfaction and employee engagement are just some of the areas where data analytics is influencing core business decisions.

Brick and mortar vs Digital

The transition from a brick-and-mortar industry to a true digital business has been significantly accelerated by COVID-19. There is a growing need to boost productivity from teams that are spread across. Through analytics, organizations are now tracking the workflow to see a change in productivity as a result of remote working.

For instance, the number of calls made, the number of meetings held with customers, or even the number of new leads generated by them. While there was no focused approach to this in the pre-COVID days, it is now a new shift in the play of data.

Since customer-facing staff or other frontline teams are not meeting any new clients, there is a greater emphasis on productivity tracking, looking closely at internal logs, CRM systems to track the pace with which work is progressing.

Government notifications are being issued practically every other week, regulators are modifying rules in several markets and local government are also announcing different measures frequently. The changing dynamics have had a significant impact on banking.

This warrants more frequent tracking to align with reality. What earlier used to be tracking data every month, has now increasingly moved to a more aggressive daily tracking of patterns.

Designing an efficient system

A good example of how analytics has helped industries such as banking has been the influence of relationship managers in wealth management. Given the aspect of human trust, it was an accepted norm that the relationship manager knew more about the customer than the bank.

Allen Roy, Senior Vice President & Head of Analytics, Mashreq Global Services

In fact, it was also accepted that when a relationship manager quit a bank, the customer would follow the relationship manager to the next bank.

Besides analytics, artificial intelligence and machine learning are playing a significant role in enhancing customer service by effectively complementing call centres to be more productive. This helps customer service executives to help with better customization of product solutions rather than engage in mechanical conversation.

Machine learning models are able to derive insight like never before from spending trends to interpret preferred cuisine or movies, and in turn, recommend tailor-made solutions that are relevant to the consumer’s trait.

Digital analytics seems to have changed these realities and made businesses increasingly agile. Detailed customer profiles now mean that banks have increased intelligence about their customers and know as much about them as their relationship managers.

This makes communication a whole lot easier in case a relationship manager quits the bank. This role in creating an efficient and process-oriented system that is less human dependent is making analytics invaluable. Clearly, the next role in business efficiency will begin with data but driven by analytics.