Fintech news, Global trendsApril 13, 2016

The Wonderful Big Data Strategy At Royal Bank Of Scotland

By Bernard Mar for Forbes

RBS has developed a Big Data strategy which it calls “personology” in an attempt to reconnect with customers.

The bank, which is currently undergoing re-privatization seven years after it was bailed out to the tune of £45 billion by UK taxpayers during the financial crisis, is combining data analytics with a “back to the 70s” approach to customer service.

The philosophy is one of the developments of the 800-person strong analytics department, created as part of a £100 million investment in analytic skills and technology across the organization.

RBS head of analytics Christian Nelissen told me that the move is about restoring a disconnect which developed between banks and customers sometime after the 1970s. The theory goes that early attempts at data-driven marketing – such as audience segmentation and mass mailing were too focussed on what the banks wanted – usually making sales – and often ignored what customers wanted.

“At some point”, Nelissen tells me, “We got to the point where we were just using data we had about our customers literally to get products out of the door.

The plan is to restore the trust and feeling of support that bank customers would have expected during the 1970s or before – when bank staff would know a customer by name, understand what their needs were on a personal level and attempt to offer services that support those needs.

Nelissen says “We didn’t just try to sell them products – we tried to help them with their accounts and to get the most out of what we could offer.”

As an example of the new strategy in operation, analysts combed financial transaction data to pinpoint situations where customers may have been paying twice for services packaged with bank accounts – such as mobile phone insurance or breakdown assistance.

Although at first there were worries that alerting customers to this situation could prompt them to cancel their RBS products in at least some cases, in practice, every single person who was alerted opted to cancel the duplicate third party service and retain their RBS service.

Other services which fall under the Personology banner include wishing customers a happy birthday if they visit a branch on the day, and automated text messages to let them know that their cash is safe if they accidentally leave it behind after withdrawing it from an ATM. Mortgage holders will also receive automated messages reminding them when fixed interest deals are coming to an end – rather than allowing them to automatically transfer onto more expensive variable rates – even though this will theoretically, in the short term at least, lead to a fall in revenue for the bank.

Nelissen says “If you look at someone like Amazon, they know relatively little about their customer compared to us, but they make very good use of the data they do have.

“We’ve traditionally been in the opposite position – we have a huge amount of data about our customer but we’re only just starting to make use of it. There’s a huge richness in what we have and we’re only just starting to get to the potential of it.”

The bank has invested in open source big data technologies such as Cloudera Hadoop and Cassandra and part of its strategy lies in partnering with startups and Big Data-driven service providers – such as CRM specialists Pegasystems PEGA +% – to drive their analytics operations.

The end result could, it seems, be artificially intelligent bank managers – as customers decreasingly interact with their bank face-to-face in branch, and increasingly do over apps and websites. Seems worrying? It shouldn’t necessarily be so, in a world where we can expect computers and robots to be driving cars and diagnosing cancer.

Key to the success of the philosophy, says Nelissen, is getting staff on board. “We’re at the point where the staff feel like they are having valuable conversations with their customers.

“They’re at the point where they understand what the data is trying to do and feel it helps them have good conversations – and that’s a big shift from where we were before.

“Staff engagement is critical – the ideas that work best, and that have the best resonance with customers, are the ones that we either got from the front line or we worked really closely with the front line to develop.”

And although Nelissen feels that the team has made great progress with restoring 1970s levels of customer service, he admits there is still a long way to go.

“We’re very excited about what we’re doing – we’re seeing significantly improved response rates and more engagement.

“We think we’re a long way down the track but we’ve still got a long way to go. As an organization we’re still investing in the scale of hundreds of millions of pounds in the next few years in the data space.”

Anyone who has seen the BBC sketch show Little Britain will know the phrase “computer says no” – used to satirize the traditionally “robotic”, impersonal nature of computer-driven bank customer services. RBS’s Personology program seems to be a step towards correcting the miss-steps that lead to this situation – using big data technology to enable more meaningful interaction between banks and customers, rather than driving a wedge between them.

Bernard Marr is a best-selling author & keynote speaker. His new book: ‘Big Data in Practice: How 45 Successful Companies Used Big Data Analytics to Deliver Extraordinary Results‘

First appeared at Forbes