How social media data impacts Retail Bank profitability

Banks are beginning to enhance the understanding of customer needs and ultimately improve profitability by leveraging local market social media data.

Retail Bankers have for years completed ad-hoc analysis to determine where they should open a new Branch or sales office or conversely consolidate locations.  They typically worked with their colleague in marketing who assisted with local marketing campaigns and customer outreach across the Bank’s retail business footprint to complete the analysis.  These isolated ad-hoc analytics unfortunately don’t normally jive with the current on-going formal monthly measurement of the existing Branch network and the projected financial plans and forecasts produced by Finance for each location.  As part of their analysis many retail bankers have viewed customers as a part of a large segment and end up treating all customers in that segment the same way.   This provides limited value and is not necessarily the best approach.

Retail bankers understand it’s no longer acceptable to evaluate and forecast branch performance and profit potential based only on existing internal customer data. External data such as local market information available via social media sources is required for true understanding of the profit and growth potential of any branch location or sales office.

Examples of this critical external data include local market competition, population density, median age, median income level, customer social preferences, channel usage preferences, unemployment statistics and number of households—to name just a few. This information must be monitored continually because the local market doesn’t remain static and absolutely affects the profit potential of any branch.  Additionally through the use of social media data the bank is able to understand customers on an individual basis versus in a large grouping thus enhancing each customer interaction by addressing financial product needs based on that customers specific preferences.

Some of the keys to enhancing branch performance and profitability is the ability of a bank branch to acquire deposits, generate revenue, retain customers, and operate efficiently and each of these is at the core of retail banking success. Obviously a more comprehensive understanding of customers by leveraging social data provides key insights for Retail Bankers to optimize marketing campaigns in addition to optimizing each customer interaction.

Incorporating this local market data and combining it with the bank’s internal data provides insight that enables the bank to provide customer facing employees the best information for optimal experiences with their customers.   Banks are also combining both the external data with internal data and applying predictive analytics to enhance their marketing campaigns by targeting the right customer with the appropriate offer at the right time.   This has enabled Banks to deliver more efficient local marketing campaigns that are targeted to the individual driving up the offer acceptance ratios and new account acquisition.

This combination of data also provide a bank’s retail management team with the comprehensive performance view of branches/channels enhancing overall decision-making and strategic management. Many executives have used external data to support branch expansion projects in the past, but unfortunately many have not used this same information to monitor the performance and profit potential of their existing branches.  Developing this discipline as a normal practice can significantly enhance profitability as a direct result of leveraging the external data captured through social media sources.