Leverage advanced data analytics to improve cardholder services, revenue generation, and fraud protections
Your cardholders are telling you something. Are you listening? Every purchase your cardholders make tells a small part of a larger story. What they’re buying, where they buy it, how often, and with what payment type. When all the pieces of the story are viewed together, your financial institution (FI) can get a very detailed picture of your current portfolio, and can even guide the narrative in a direction that is good for both cardholders and your institution. If your current data analytics tools aren’t providing you with rich data and analysis, it may be time to upgrade.
Strong data analytics on cardholder behavior makes an impact in three major categories that are crucial to the health of any institution:
1. Finding new opportunities for revenue
2. Targeting cardholders for better engagement
3. Preventing fraud losses and data theft for greater profit
Finding ways to increase revenue is a time honored tradition for every FI. Employing insights from live transaction data is a healthy way to approach that task. Gaining greater understanding about your debit and credit portfolio can help you determine where to invest and drive growth, without the complexity and emotion that often complicates investment decisions.
Benchmarking is an invaluable exercise for FIs looking to expand revenue streams. A robust analytics tool is capable of looking beyond your own portfolio to analyze cardholder behaviors across the financial industry. Without this type of industry intelligence, it’s impossible to truly benchmark your FI’s performance in relation to other institutions of a similar size.
With detailed industry benchmarks, you can identify areas with the largest potential for growth. If other institutions show bigger movement in a particular segment than your institution, it’s worth taking a look to see what strategies they’re using that could benefit your institution. To get the most out of this data point, it’s important to use an analytics tool with a large data pool and a high participation rate from other FIs.
Your FI should be interested in understanding cardholder behavior. The first important step is learning to see the people behind the cards, not just the BIN. Luckily, you don’t have to be an analytics expert to segment cardholders effectively. There are advanced analytics tools on the market that enable you to customize your segmentation in dozens of ways. Doing so helps your FI curb attrition, target underperforming segments, and nurture the most profitable relationships.
Marketing campaigns are only as successful as your segmentation method. Applying granular analytics to your marketing campaigns provides comprehensive insights that have a direct and positive impact on their efficacy. When you dissect data by card type, demographics, and transactional details, you can accurately and efficiently calculate the impact and ROI of your various campaigns.
For example, if you break transactions down by card issue date and see that new cardholders aren’t spending as much as cardholders with established account history, you can run a promotion, targeted solely to new cardholders to incentivize usage. Without the ability to segment at that level, you could miss out on the potential revenue that new cardholders present to your FI.
Measuring the success of your marketing campaigns is easier with big data analytics. With rich data at hand, you can test theories about what incentives work with particular groups, create control groups for analysis, and shift tactics on the spot if the results aren’t trending in a positive direction.
Curbing fraud and data theft
One of the strongest cases for advanced analytics is the ability to make a big impact on fraud levels. Fraud bleeds revenue from your FI every day. The weaker your fraud detection technology, the greater the losses you’ll experience. Closely monitoring portfolio activity helps your FI identify suspicious activity before it becomes a bigger issue.
Far reaching fraud data can deliver a sort of forensic expertise to help identify fraudulent patterns. Recognizing the patterns quickly allows your FI to respond to fraudulent transactions faster. It can also help you set up an early warning system with monthly alerts and customizable system triggers.
Detecting compromised cards as early as possible also has a positive impact on cardholder attrition. Taking proactive steps to protect cardholders is one of the most important ways that FIs foster trust with their card base. Investing in an analytics solution that can directly impact cardholder trust is a must for FIs in today’s risky and competitive marketplace.
By using aggregate data without compromising personal information, some advanced analytics tools can even help FIs avoid devastating financial and reputational losses associated with a data breach.
Data analytics technology has improved significantly in the past couple of years. If you haven’t updated yours recently, or are unaware of the advancements that have been made, it’s definitely worth looking into to make sure you’re making the most of your available data. You can get started by contacting Vantiv to learn more about advanced data analytics services and what it can do for your FI.