Unlocking Legacy Data to Drive Increased Revenue
Pamela Hannett
VP @ Liberty Bank #womeninleadership #womenintech #salesforce #womeninbanking
Banks and credit unions can no longer coast on the service conventions of yesteryear. Amid increased competition, rampant digital disruption, and the looming signs of oncoming recession, institutions throughout the financial services sector are under pressure to provide high-value service to their customers and members — or risk losing them to more appealing competitors.
That said, if institutions can deliver convenient, personalized experiences to their existing customers, they will be better positioned to cultivate long-term loyalty and distill more value from their account holders. However, many institutions face a critical hurdle: antiquated legacy systems. In this article, we will consider:?
Amid increased competition, banks and credit unions are under pressure to distill value from existing customers
It's a fact: banks and credit unions can no longer coast on the service conventions of yesteryear. Amid increased competition, rampant digital disruption, and the looming signs of oncoming recession, institutions throughout the financial services sector are under pressure to provide high-value service to their customers and members — or risk losing them to more appealing competitors. However, meeting that high service bar has become increasingly difficult. After all, customers are no longer content with merely receiving service; they want personalized experiences, and they want them now.?
Customer Sentiment in Numbers (Salesforce)??
In part, these lofty service expectations have been fueled by fintech (e.g., "financial technology") disruptors who have increasingly normalized convenient, digital-forward experiences. Consumers are ready and willing to explore alternative financial offerings if they believe doing so will deliver value. In 2021, 88% of U.S. consumers reported using fintech to help manage their personal finances. Even older demographics initially resistant to the disruption have come on board — between 2020 and 2021, Baby Boomer adoption doubled from 39% to 79%.?
In this context, it's clear that conventional institutions must step up their metaphorical game to remain competitive and retain their account holders' loyalties. However, doing so can pose a strategic challenge. If banks and credit unions choose to not create similar services offerings in-house, they have to partner with those fintechs to remain competitive. Oftentimes, they don't want to align with them because then their value proposition and identity changes; they are no longer perceived as the hometown community option — partnering with a fintech brand introduces risk of potentially diluting their own brand.
That said, if banks and credit unions can surmount the challenge of providing exceptional services, research suggests they will have an advantage in retaining their customers. According to a recent GOBankingRates survey, 50% of U.S. consumers maintain accounts at one bank, 28% rely on two, and only 22% have accounts with three or more. Additional data from Mercator Advisory Group suggests that customers and members who choose a primary bank tend to do so because they feel comfortable with the institution or appreciate having their investments and services in one place.??
The fact that consumers tend to rely on just one or two banks represents a clear competitive opportunity for banks and credit unions. If institutions can deliver convenient, personalized experiences to their existing customers, they will be better positioned to cultivate long-term loyalty and — ideally — distill more value from their account holders. Moreover, institutions may reap higher ROI from their outreach efforts by focusing on existing customers.?
Acquiring New Vs. Converting Existing Customers (Harvard Business Review)
Every bank, credit union, and mortgage company is trying to create depth in their relationships. For example, the financial institution can access real time insights such as, ‘this group of members have $100,000+ in their free checking accounts and it’s been there for more than 90 days without wealth management products,’ that is powerful information. These insights empower employees to offer wealth products to a defined segment, creating leads and referrals for my wealth management team and leaving my retail team feeling impactful. In the past, this kind of ask was routed to someone in the back office who had to run a complicated query in the core banking reporting system and provide it to marketing. This actionable data is now at your fingertips. Banks and credit unions have the customer and member information they desperately need to proactively predict customer needs and suggest value-add services — in theory. The only problem: their legacy systems aren't all that conducive to quick data analysis or real-time opportunity flagging.?
Dated legacy systems make identifying existing opportunities challenging — but not impossible
In financial services, legacy systems aren't just commonplace; they're practically a given. Industry institutions rely on "core systems" to facilitate daily operations; some larger organizations may even maintain multiple core systems to uphold different lines of business (e.g., wealth management, mortgage, etc.). These frameworks manage every transaction and, in many ways, serve as the institution's beating heart. However, for all their utility, legacy systems aren't all that manageable.?
Nearly half (43%) of all banking systems are built on COBOL, a programming language developed in the 1960s. At its inception, COBOL was hailed as a revolutionary innovation and valued for its ability to manage massive volumes of data accurately. Today, however, COBOL-constructed systems are often cumbersome, inflexible, and expensive to update, given that most of the programmers who know how to use it have aged out of the workforce. Core systems' uses are typically limited to transactional calculations and recordkeeping; they don't offer rich customer profiles or interaction summaries.,????
Moreover, such frameworks often utilize a batch-process approach to data management. In other words, employees can only access data relating to a given transaction 24 hours after that transaction was logged. Gathering and analyzing data can become a frustrating, drawn-out endeavor — especially given that employees' findings may be out of date by the end of the reporting process. Such processing delays can also create service problems if employees lack access to real-time customer or member information.?
Think about it from the customer's perspective, if you have to walk into a branch, you want the teller to know everything about you by the time you join the line. You want employees to call you by name because you're only walking into that branch to get the personalized experience you can't get online. But if you don't have immediate access to your customer data, if you can't access a snapshot of that customer's financial situation on demand, then you can't provide that personalized experience or identify opportunities for further engagement.
Moreover, given that core systems are fundamentally transactional, it can be difficult — if not impossible — for banks and credit unions to track whether their outreach efforts resulted in a purchase or service sign-up. Some core banking system providers have attempted to circumvent the problem by bolting on external customer service platforms into their systems; however, these additions rarely provide much tangible support.?
In short: if banks and credit unions want to boost their competitive standing by deepening their relationships with existing customers and members, they must be able to access and use their customer data to further generate untapped revenue. Core systems alone are no longer enough; institutions need an engagement layer that provides access to real-time information to make personalized service recommendations and proactively identify opportunities for further engagement.?
The question is, how should they go about doing so? Salesforce's Financial Services Cloud may provide an answer.?
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With Salesforce, banks and credit unions achieve visibility into customers and opportunities
Engagement Layer: A system that acts as a user-friendly "middleman" between an underlying core system and employees. These intermediary systems make it easy for team members to access and use information.?
For over a decade, Salesforce has designed, delivered, and deployed digital solutions that empower financial services providers to better understand and serve their clientele. The company's verticalized product, Financial Services Cloud, helps banks establish a digital engagement layer above their core banking systems so employees gain instant access to real-time customer and member data. Employees no longer need to wait 24 hours to access batch-processed data in complex queries or swivel between core systems; all the information they need is instantly available in a rich account holder profile.
With Salesforce, banks and credit unions can make data instantly actionable. Financial Services Cloud makes it easy and intuitive for institutions to segment their customer bases and gain crucial insights into every customer's household data, transaction history, service record, and more. But that's not all; institutions can also leverage Salesforce's AI, data analytics, and process automation functionalities to proactively identify engagement opportunities and surface customer profiles as timely leads.?
Once equipped with Financial Services Cloud, banks and credit unions can:?
You're not just cross-selling, you're helping customers and members get the support they need to thrive. If you have visibility into a person's financial situation, lifestyle, and behaviors, you can determine what they need to be financially supported — sometimes before they even know themselves.?
Solution in Practice: Sample Credit Union helps Brandon C. tap into wealth management opportunities
The Customer: Brandon C., a 29-year-old, unmarried tech worker who maintains $150,000 in a free checking account and currently has no relationship with our wealth management team.
The Scenario: Sample Credit Union leverages Financial Services Cloud to segment its account holder base and identify Millennial members who may benefit from additional services.
?The Salesforce Outcome:
Institutions can achieve high ROI by unlocking legacy system data
The financial services market is arguably more competitive today than it has ever been in the past. However, conventional banks and credit unions shouldn't be intimidated or overwhelmed by the increasing pressure. After all, they have the one advantage many digital upstarts lack: robust customer bases.?
If financial services institutions can leverage Financial Services Cloud to unlock their legacy system data and develop more profound and profitable relationships with their account holders, they could stand on par — or even overtake — their competitors. The potential return on investment for Financial Services Cloud is enormous; rather than waiting for customers to come in, banks can surface opportunities for different products and services within customer segments they didn’t have access to (or even know existed) before Salesforce. Moreover, because Salesforce allows its users to trace outreach outcomes, financial institutions can easily calculate ROI.?
For some institutions, finding ROI can be as easy as tracking conversion rates. How many loans were opened as a result of proactively-flagged opportunities? How many investment accounts were opened? Salesforce can help you track exactly how much revenue your organization achieved by unlocking legacy data.
Research backs this assertion. In 2017, an independent study conducted by Nucleus Research found that adopting Financial Services Cloud helped Trilogy Financial — a privately-held financial planning firm with over $2 billion in client assets — achieve a whopping 147% ROI and an average annual benefit of $972,091. Two years later, the same research team conducted a similar report for Sequoia Financial Group and reported an even higher ROI: 188%.??
As analysts commented in a press release for the Trilogy Financial retrospective, "Nucleus found the project enabled the company to increase productivity, data accuracy, and visibility across the organization while reducing costs. Prebuilt industry-specific capabilities enabled Trilogy to avoid additional customization and integration work [plus] ongoing administrator time that would have been needed without Financial Services Cloud."?
Customization is a significant pain point for financial services providers. As discussed earlier in this article, core systems are often built with an archaic programming language, and tend to be costly to customize. When Salesforce serves as an organization's primary engagement platform, customization is replaced with configuration not code and is far easier — and less expensive.?
Core systems will always be integral to operations in the financial services sector — however, the days of relying solely on those systems are behind us. To remain competitive amid digital disruption, increased competition, and economic uncertainty, banks and credit unions need to tap into their data and develop deeper relationships with their existing customers. Salesforce can play a crucial role in the process; however, implementing the platform isn't a process that organizations should take on alone.?
Unlock your organization's legacy system value with Gerent
At Gerent, we specialize in empowering organizations in banking and lending, capital markets, and wealth and asset management; our veteran team collectively holds over 150 years of combined experience and has completed more than 200 projects collectively across financial services. To find out more about how your team could benefit from unlocking your data to generate revenue — or strike up a conversation with our consultants — please contact us.