Right now, huge amounts of electronic data exist within banks and other financial institutions. The valuable bits of information are embedded in data repositories. The huge size of these data sources make it virtually impossible for an analyst to come up with useful information that will assist a marketing professional in the decision-making process.
Data mining can help solve business problems in banking and other financial services companies by finding patterns and correlations in business information that might not be obvious to marketing managers because the volume of data is simply too large.
Taking it a step further, a marketing team needs to find the commonalities of transaction data (for their customers) which will help them in better targeting and acquiring new accounts and retaining a profitable customer base.
Data mining techniques can help marketers identify various categories of customers come up with segment-based products and/or pricing that will assist in better revenue management as well.
Because of the large volume of data, some banks have found it challenging to make sense of it all. Traditional statistical methods do not have the capacity to analyze the scale of data which leads to the need for modern data mining techniques.
A place we often recommend to our customers as a starting point is getting a good profile of their existing customers. Customer profiling is a data mining process that will help build profiles of different groups from the company’s existing customer database. The information obtained during this process can be used for different purposes, such as:
- understanding business performance
- undertaking new marketing initiatives
- market segmentation
- risk analysis
Due to an increase in competition, it has become more important to make informed marketing decisions. There is a need for customer care and marketing strategies to be in place for the success and survival of any business. With the help of data mining, it is possible to put in place a winning game plan.
Image Courtesy: www.stat.columbia.edu
About the Author:
Bob McCarron is the Financial Services and Insurance Practice Leader at SIGMA Marketing Group. Connect with Bob on , or follow him on .