Behavioral analytics: A logical perspective of customer behavior
My phone beeped and a personalized message from my bank appeared: "Dear XXXX, new investment option factoring your income, age, and investment preferences awaits you." Initially, I thought it was just a promotional message, but then I realized it was more than that. Living in an era of analytics where every bit of data can be analyzed, I sensed it could be the advent of the new phenomenon -- behavioral analytics!
As the terminology signifies, behavioral analytics is about analyzing the behavioral patterns of customers. To elaborate, it is to be aware of customers' expectations and their manners. With the right set of behavioral information, one can derive conclusions on their requirements and possible actions in certain scenarios. This branch of analytics is widely used across industries including retail, e-commerce, communication, and the list goes on. Of late, even the financial services such as banking sectors have started embracing the new analytical approach.
The banking arena is becoming competitive day by day and hence, it is very important for the banks to devise the best marketing strategies to win customers. Keeping that in mind, banks have started leveraging behavioral analytics to trace their customers' transactions, preferred banking channel, i.e., online or mobile, and analyze their interactions with processes and different banking channels. Additionally, with the help of behavioral analytics, banks can easily track whether customers are navigating the online site / mobile app, in the same way or whether each customer differs in usage patterns. It helps banks to create a solid database to analyze customer behavioral pattern. This detailed analysis helps banks to draw a clear picture of their customers' requirement. It indeed helps them to better engage with their customers and use the analysis for positioning the products well at the right time through a proper banking channel.
As the customer base grows, the banks will also get loads of data. If banks fail to manage the data efficiently and effectively, they become vulnerable to fraudsters. The banks across the globe are in news for the alarming rise of frauds and malpractices and the fines / penalties associated with it. If customers feel their data isn't secure with banks, they would prefer switching their banks. Hence, the banks are using the new concept of behavioral analytics as a significant detection tool to combat frauds. It tracks the behavior of every customer and if the bank finds any change in transaction pattern such as frequent entering of passwords, editing of profile details, and unexpected increase in transactions or high value based transactions. It signals to banks on the possible case of malicious or fraudulent transactions. Then the banks can proactively alert customers and also take extra efforts to ensure data security. As behavioral analytics dives deep into the account holder's information, it ensures better security of data than the traditional monitoring tools, which are more vulnerable to frauds.
In a nutshell, behavioral analytics seems to be a win-win case for both banks and their customers. From customers' perspective, getting personalized solutions that suit their needs strengthen their confidence in banks. On the other hand, for the banks along with the benefits of effective customer engagement, behavioral analytics helps them to combat fraud which will prevent paying penalties for malpractices and fraudulent activities.
Michael Voegele, Chief Information Officer (CIO) of Adidas said, "Data is the fuel and analytics is engine at Adidas." I too feel that data and analytics would decide the future of all industries, especially banking which is becoming increasingly digital. It's time for banks to jump into the soaring wave of analytics, especially behavioral analytics, which has immense potential to analyze data and deliver customized solutions that in turn would help banks fulfill their motto - anything and everything for customers!