In the realm of financial services, risk mitigation is not just a priority—it’s a necessity. The staggering costs associated with data breaches, including hefty penalties, fines, and irreparable damage to reputation, can be crippling. This is why banks, lenders, insurance companies, and other financial institutions take extraordinary measures to safeguard their technology infrastructure, often insisting that customer data be securely held behind their own firewalls.
Equally crucial to risk management is business innovation driven by understanding the customer. The goal is the creation of a comprehensive, up-to-date profile of each customer, household or organization. This detailed profile enables financial institutions to accurately identify and differentiate individual customers across multiple accounts and contexts. A contextual understanding means having a thorough, real-time breakdown of an individual’s entire portfolio, including main and subaccounts, authorized users, secondary account holders, and whether the individual is acting as the owner or an authorized user of a personal or business account.
A Contextual Customer Understanding
With an accurate, real-time, contextual understanding of a customer – with “customer” referring to an individual, household, or business – financial services organizations are able to offer a next best action in real time, a critical capability for guiding a customer to a desired and advantageous outcome. For instance, consider a customer who starts an online engagement with an insurance company. A company that can instantly assess risk because it has an accurate, real-time understanding of the customer’s identity is able to produce a real-time quote. The same holds true for an online customer engaging with a mortgage calculator, and the ability of the lender to produce a quote that minimizes risk while being attractive to the customer.
Now consider what a financial services institution needs to have to make this happen. It’s not enough, for example, that a company uses a basic, deterministic match to link a device ID with an individual. Will a device ID alone be enough to determine if it is a husband or a wife who is looking for a real time quote? Of, even if the company is fairly certain the device is being used by the head of household, does it know that the individual is recently divorced – which might be the reason for engaging with the mortgage calculator?
There are many life events, big and small, that have a material impact on the optimal interaction a financial brand creates with a customer. The company with the deepest, most up-to-date, and accurate understanding of a customer will be in the best position to minimize risk, grow the customer base, reduce churn and drive higher revenue.
The Power of a Golden Record
This is the power of the Golden Record, a consistently updated unified customer profile that is the basis for being able to profitably differentiate one customer from another. Creating a Golden Record is a key function of a customer data platform (CDP). Containing a full identity graph as well as a full contact graph, a Golden Record provides financial institutions with a contextual understanding of an individual customer that deepens over time. By using persistent key management and updating the unified profile in real time, a Golden Record accounts for any and all life changes that impact an understanding of a customer. Changes to an email or physical address, a new job, a new dependent, a marriage, a child off to university – a Golden Record contains an updated record that includes everything that is knowable about a customer and the dynamics of a customer in the context of a household, a business, and even within the parameters of various accounts.
When data quality steps – normalization, standardization, data enrichment, advanced identity resolution – are complete at data ingestion, users of the Golden Record (call center, UX designers, loan officers, chatbot, bank teller, etc.) can trust that the unified profile is a precise representation of a customer at the moment of interaction – inbound or outbound.
Prioritize Data Quality
Financial services companies need to understand that not all CDPs approach the creation of a unified profile the same way – or with the same urgency. This is an important factor to consider, especially when there are real risks involved in not being able to understand the intricately detailed nuances of a customer in real time. There are, for example, many CDPs that do not consider data quality to be a core competency, certainly not something that the CDP performs continuously, in real time, at the moment data is ingested from every conceivable source. Others limit identity resolution to a basic, deterministic match, only linking various records if there is an exact match. The problem here, of course, is that customers are complex. They have multiple identities (nicknames, identifiers, addresses, etc.), multiple account and multiple, complex relationships. Deterministic matching alone is woefully inadequate for unraveling those complexities in real time at the moment of engagement. On top of that, there are other CDPs that operate strictly in a SaaS environment and require companies to hand over their customer data.
For these reasons, when it is important to safeguard your customer data and develop a detailed understanding of your customer so that you can deliver next best actions that introduce the least amount of risk, we welcome you to take a look at the Redpoint difference.
Redpoint is the only CDP for banks and other financial services that thoroughly addresses data security, accuracy, and accessibility challenges. With Redpoint, leading organizations gain a competitive advantage by treating customers individually and taking customer experience to the next level.
