Gathering and reporting bankwide data is becoming a competitive norm
By Karen Epper Hoffman
In a world where information can be the most valuable currency, community banks are gathering more of their internal data. They have lots of options.
According to Mark Dittman, CEO of IBT Inc., a bank software provider in Cedar Park, Texas, most community banks gather data well for reporting purposes. Drew McMullen, a partner and managing director for Sense Corp. in Maplewood, Mo., says most community banks are gathering, monitoring and reporting data well from core areas.
“Community banks are using some basic analytics processes for reporting on account sizes, credit risk and elementary customer segments,” agrees Karan Bhalla, managing director for IQR Consulting in Santa Rosa, Calif. “However, community banks should begin to focus on analyzing data with the goal of improving the customer experience.
“With competition from big banks, online banks and credit unions, the community banking sector must focus their efforts on what makes them unique: a local bank employing local people to serve the local customers.”
Lending, transaction data
Community banks generally do well in harvesting their lending data, Bhalla says. To build stronger customer relationships, he adds, more banks should distribute more data lower down to their loan sales staff, particularly data on loan growth, loan profitability and risks, and past-due loans and critical loan exceptions. McMullen says community banks should be regularly gathering loan cost data on servicing, marketing and the application process, as well as the costs to manage delinquent borrowers.
Kendall Keeling, a director of analytics and operations for at CRIF Lending Solutions in Atlanta, says more data should be pulled from loan origination systems and core billing data systems. Bob Legters, senior vice president at FIS Global in Jacksonville, Fla., says examiners will look whether banks are gathering data on their loan portfolio for risk management purposes.
“If the data is gathered and analyzed, social media can help community bank marketers form a brand strategy, provide superior service and support the local community.”
—Karan Bhalla, Consultant
Meanwhile, Paul Ablack, CEO of OnApproach LLP, a data analytics software firm in Plymouth, Minn., stresses the importance of pulling customer transaction data into a single repository—including credit cards, debit cards, checking accounts, savings accounts, loan payments, insurance purchases and credit score changes. Such analytical insights can accelerate credit decisions to more quickly fund approved loans.
“If there is a question about the data, the branch manager should be able to drill to the detail within four to five clicks of a mouse,” Ablack says.
Transaction history is probably one of the most critical areas of improvement for community banks both in capturing data and storing it for future analysis, Bhalla says. He also believes community banks should collect social media data, including favorable and negative postings, to help manage their brands. “In a social world where it becomes difficult for any brand to control influence, it’s imperative that social media be used to get in front of the bank’s brand image and connect deeply with customers,” he says. “Then, if the data is gathered and analyzed, social media can help community bank marketers form a brand strategy, provide superior service and support the local community.”
Collecting data on a regular, possibly frequent basis is essential to a solid data analytics strategy, several bank data analysis experts say. Ablack says branch performance data should be collected and reported daily. Such data can include the number of customers who opened a new account, the number of new products used by each customer, and total savings and checking account balances. That data should include how many customers closed accounts and why, as well as the average age of those customers. Specific consumer spending and saving patterns, purchase details, debit and credit card usage patterns, and loan payoff rates by demographic are other data sets that should be considered.
However, Bhalla says how frequently data reported is less important than the quality of the analysis that is conducted with the data collected. Whichever goals a bank decides to achieve will determine what data it should collect, as well as how often and how such data is analyzed, he says. For instance, if a bank decides to reduce slow payments within its credit card portfolio, then specific data can be identified and gathered to support that goal.
Keeling says top bank executives should receive historical context along within the snapshot data reports they obtain. Bhalla points out that advanced analytics should also provide a comprehensive view of each customer.
Frontline workers should know their day-to-day performance, which could include how long it takes on average to process customer applications and how many people are involved in each process.
“Great analytics can impact every aspect of the community bank’s performance because ‘what gets measured gets managed,’” Ablack says. “Community banks have a great head start in that they control vast troves of financial data about their customers that is not available in the public domain.”
Karen Hoffman is a financial writer working from Europe.