Digital marketing capabilities in retail banks - Segmentation and BI

Always a data-driven industry, the proliferation of digital and online channels has provided banks and financial companies with a huge avalanche of data. A recent Wipro-Efma survey found that banks are tapping into this resource to develop several digital marketing capabilities, such as segmentation and BI.

Segmentation of the customer base - in order to provide focused propositions, targeted marketing offers or differentiated service levels - is of course common practice among banks. Some banks have even restructured their retail businesses around various customer segments. A commanding majority of banks (90%) have also told us that segmentation of the customer base is increasing. One bank we spoke to said that, because banking is not a retail business but a counseling business, there is a need for segmentation to be much more fine-tuned.

73% of banks provide differentiated service propositions within the mass retail segment e.g. bronze, silver, gold accounts. Most banks also provide specific propositions for the youth, student and affluent segments (see figure below).

Digital marketing capabilities in retail banks - Segmentation and BI

It is more or less universal for banks to use demographic data and customer value data to segment the customer base (see figure below). Surprisingly, there is still a small minority of banks who do not use these measures for segmentation purposes. In addition, not many banks use customer lifetime value for segmentation, and when used it is typically for static “strategic” analysis rather than for dynamic real-time marketing purposes.

One bank felt that in the future, traditional segmentation was likely to become less relevant due to the potential for one-to-one marketing in digital channels. However, it could still be important for broader marketing activities. Another bank felt that traditional segmentation was sub-optimal and would be replaced by one-to-one personalization.

The use of online data, whether web clicks or social media, for segmentation is still very rare.

Business intelligence: Collecting and storing more and more data from different sources is part of the challenge in digital marketing. Another challenge is how to analyze it; banks are increasingly using advanced techniques like predictive analysis (71% of banks) and micro segmentation (61% of banks) to do this.

It is heartening to see that banks are utilizing the data at their disposal to segment their customers and gain business intelligence, even though their efforts are mainly at a high level at the current time. This means that as they move to the next level of micro-segmentation and real time BI, banks will be able to improve differentiation and consequently, increase revenue, profitability and growth.

About the Author

Meenu Bagla is Global Marketing Head for Finance Solutions Business of Wipro. She has spent more than 13 years with multiple technology solutions providers addressing the Global Financial Services Industry. She has worn many hats including Alliance Management, Business Development, Innovation CoEs, GTM, Solutions Selling and Account Management to mention few. She is an avid reader, cook and is passionate about social welfare for underprivileged women and children.

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