A Single Customer View: Now a Necessity for Financial Institutions
When it comes to analyzing customer data, financial institutions are facing a steep challenge to keep pace with regulator demands. In fact, regulators are mining financial institutions’ customer data to identify potential legal violations better than many of those institutions. This needs to change, and fast, for these companies’ legal compliance and their economic success. The path is for financial firms to build single customer views. To help these firms understand the need and the solution, PwC recently published Chasing a vision: Pursuing a single customer view for financial institutions.
A single customer view is, simply put, an electronic portal that allows the front and back offices, the marketing and the compliance sides, to see in one place all of the necessary data about a customer. It’s about putting in one place disparate client information held in different places around the firm. This helps the retail side acquire and retain customers better while managing risk more effectively.
Unfortunately, there is no standard, out-of-the-box software package to accomplish this – each financial institution must develop its own, customized platform based on its individual needs, capabilities, and data environment. Doing so, however, is critical because examiners are excelling at connecting the dots and uncovering hidden linkages at the customer and transaction levels.
There are three key factors to keep in mind when developing a single customer view. First, firms must recognize that the single customer view should offer data that meets the needs of their diverse, in-house stakeholders. The view must be broad enough to provide sufficient information to Risk, Compliance, IT, Marketing, and financial crime specialists.
Second, obtaining a full view of a customer’s relationship with the firm requires new data management and analytic techniques. It’s all about distilling different insights from copious amounts of client data held in various formats. For example, firms need to start mining unstructured customer data (from emails and audio recordings, for instance) and integrating it with such structured information as transactional records. Crucial to this effort will be using distributed analytics – forgoing centralizing everything in one place and going out and analyzing the relevant data at its source.
Third, attaining single customer view isn’t a turn-key job that you can just turn on for the entire institution. Rather, firms should begin with pilot programs to demonstrate their value to internal stakeholders and phase them in more broadly from there.
To be sure, this is tough stuff. Customer information is distributed across geographies, business units and information systems. For this reason, developing a unified customer view might seem daunting, if not prohibitively time-consuming and complex. However, it is not. More to the point, it is critical that financial firms gain a better understanding of customer activity. The dramatic increase in enforcement actions coupled with the constant pressure to identify operational efficiencies and boost profits makes it a necessity.
Collections Business and Technology SME
8yEasy, to articulate, easy, to gather, difficult to process. In some cases, particularly on joint financial accounts, you can easily breach DPA and compliance
Chief Strategist, Open Data and Standards | Author "Understanding the Financial Industry through Linguistics"
9yA good view of the issues and how to start to solve them. But, let's recognize the real root cause of all this - the lack of a unifying key for identifying any client/entity and the financial instruments they trade and own. Except now we have solutions to both of these issues - LEI can help create all those linkages - in the Link analysis 1&2 in the paper, insert LEI, and it's done once. It doesn't have to be maintained again when those other data elements change (as they always do. The same with Financial Instruments - using the Open Symbology of FIGI - you can create the key linkages for what those entities own and trade - necessary for reporting and risk - and a notable lacking detail in the paper of a key piece of information (the actual instruments that comprise any kind of risk).
Leading & Growing Consulting Practices ★ Connecting Analytics, Economics & Strategy ★ Developing Tomorrow's Leaders & Experts ★ Speaker ★ Onalytica Key Opinion Leader Industry 4.0
9yThis is a very important task for all the reasons you've mentioned. An certainly not an easy task. Even if you were able to put the data all in a single location, the information that each department would want to see and how it would be used would differ. From the perspective of the entire system it is quite complex. Thanks for sharing John!
Voice Biometrics & AI. Digital Transformation. Entrepreneur. Boards. Strategic Advisor.
9yJohn, Wonderful article! A single Customer point of View concept, as you are aware has been floating particularly around financial institutions for the past 5 decades. However given the complexity to implement such a PoV, no FIs have been able to do much and in fact have become worse at truly understanding their Customers. At APASAN, we have built unique ways to achieve a single Customer point of view. Let us meet to make this concept turn into reality across the globe.
Head of AML and Compliance Officer at Sí Vale México (CNBV and UIF certified)
9yAnti money laundering risk and anti fraud risk manager. John, cleaver point of view. There are not bad teams, there are bad leaders. Understanding the customer's activity is as important as financial metrics and income forecasting, so managers must include customer-base approach in their planning.