Digital Data Analysis Can Make FI Interactions Even More Personal — Here’s How Applied Analytics Technologies Can Help FIs Better Serve Consumers

September 9, 2021

  • Applied analytics technologies like the ones offered by FICO can help community financial institutions turn their own data into actionable information that drives better customer interactions.
  • FICO’s new score capability enables financial institutions to see a fuller picture of a customer’s history and risk profile, adding another layer of data to the traditional credit score.
  • As digital banking becomes more prevalent, harnessing the power of data keeps the consumer relationship at the forefront, even in transactional interactions such as sales, credit assessments, and collections.

Although the credit score is FICO’s best-known product, it only makes up about a quarter of the company’s annual revenues. At its heart, FICO deals in applied analytics — turning massive amounts of data into actionable information that businesses can use to drive better results.

As Vice President and General Manager of FICO’s advisory organization, Tim VanTassel draws on a long career in financial services to oversee the countless ways that FICO brings its advanced number-crunching capabilities to a diverse array of industries across the globe.

In the world of financial services, community financial institutions have a unique opportunity to align their strong customer connections with the digital banking services that today’s consumers have come to expect.

In an episode of the Digital Banking Podcast, Tim speaks to what sophisticated data companies like FICO can offer to community financial institutions, and he shares some of the ways that applied analytics can strengthen vital accountholder relationships.

Seeing the Whole Person

Community FIs are known for their focus on personal consumer relationships, built over many years as these institutions live and grow alongside the communities they work with. It’s these relationships that allow community FIs to treat people differently than a big bank might.

Say, for example, that you need to purchase a new car. You spend hours at the dealership only to be denied an auto loan because, unbeknownst to you, someone has fraudulently opened a credit card in your name and wrecked your credit history.

But instead of taking this as the final word, you call up your FI, who approves your loan in a matter of minutes — because they know you and understand your credit risk based on that personal relationship.

“The untapped potential is in the deposit data that is available,” Tim says. “Understanding what a consumer’s deposit history looks like can be used to provide an analytic that works in tandem with or independent of credit score.”

This gives a fuller picture of an individual’s financial performance. It can inform how an FI might approach everything from approving a loan to waiving an overdraft fee to reaching out with a repayment reminder — all based on the person’s banking history.

The good news is that this data is available within the FI’s core system. By working with a partner like FICO to securely analyze deposit data, institutions can rely on what they already know about their accountholders to drive better outcomes without needing to purchase third-party data platforms.

Serving Consumers Through Relevant Offers

There’s little that makes a relationship feel more transactional than an unwanted or poorly timed sales pitch. But Tim says the difference between sales that feel transactional and ones that enhance the relationship is relevance, which is another area where community FIs can set themselves apart from larger institutions.

Tapping into consumer data the way that FICO does might bring to an FI’s attention that a consumer appears to be planning a home renovation. This gives the FIn an opportunity to reach out to offer a relevant product such as a home equity loan or credit card — likely giving the consumer a better deal than they might find through a bigger institution.

“What sales are supposed to be,” Tim says, “are providing value to somebody with an offering that your organization has that’s differentiated.” Relevance drives that value home in a way that reinforces the trusted relationships a financial institution has built.

Hybrid Banking: Where Data Meets People

As the COVID-19 pandemic has reduced face-to-face interactions between consumers and their financial institutions and as more banking activities move online, even a well-nurtured financial relationship can begin to feel more impersonal.

Technology and data can help here, too — but people are still the key.

“Look at some of biggest organizations in the country that are extremely good at handling the equivalent of accountholder attrition,” Tim says. “They don’t do that through automated offers. They do it through machine learning that helps them figure out who’s going to leave, but then they have really smart, friendly people that talk to people on the phone and say, ‘Hey, I’d like to chat about this.’”

The bottom line, according to Tim, is that “digitization brings this ability to focus your extremely proficient, people-oriented staff on the things that matter most across your base.”

Whether it’s using existing data to fill out a loan application or reaching out to a longtime accountholder who’s having trouble making a payment, technology can enable a more personal communication and a better experience than outsourcing these tasks to a call center or automated email.

Likewise, technology and analytics can introduce efficiencies that can be passed on in the form of better rates or quicker turnaround times.

“It’s that hybrid play that is so exciting and so interesting,” Tim says. “You have the friendly people — how can you still use them, but use digitization to drive them to more meaningful interactions?”