Making Big Data Work in Retail Banking

Making Big Data Work in Retail Banking

          
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Making Big Data Work in Retail Banking

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    Creating New Revenue Streams

    Companies in multiple industries are generating entirely new revenue streams, business units, and stand-alone businesses as a result of the information provided by the data they hold. (See “Seven Ways to Profit from Big Data as a Business,” BCG article, March 2014.) Banks are no exception; indeed, their vast volumes of data give them opportunities for customer insights that other businesses can only imagine. The challenge for banks is in using and manipulating data in ways that respect customer trust and privacy. The EU has promulgated especially stringent regulations in this regard. (See Earning Consumer Trust in Big Data: A European Perspective, BCG report, March 2015.)

    Despite these constraints, several retail banks have found ways to monetize insights (as opposed to data) generated through their core activities by making customer data anonymous and aggregating or packaging it in ways that are valuable to other companies.

    In one example, a leading European retail bank used data from its payment-card unit to build a digital dashboard for restaurants and bars. The dashboard displays high-level, aggregated information about each establishment, including the age and revenue brackets of customers, the behavioral segments to which customers belong, and whether they are first or repeat customers—information that restaurants could use to better serve, and sell to, their patrons. Restaurants were quick to recognize the dashboard’s value: it achieved penetration of more than 50% of the bank’s restaurant clients in just a few months. The bank projects new revenues of €50 million with a profit margin of about 40%—and that’s after paying for the bank’s new big-data system. The bank has since launched several similar initiatives.