Earnix: Staying successful in the age of open banking

Udi Ziv, CEO at Earnix, explains how analytics and machine learning will help retail banks to provide customer-centric services and compete with new market entrants.

How important is the effective use of analytics for retail banks operating in today’s market?

Analytics is a critical success factor for retail banks, particularly because they are having to up their game to compete in a world where companies such as Amazon, Uber, Apple and Google are defining the modern customer experience. These companies have led customers to expect personalisation across all industries. All industries that serve consumers, especially millennials, will need to use the tools of the trade – analytics – to understand and predict what customers will want, and be able to instantly deliver this in every interaction, across evert channel.

Bankers understand this and are taking steps to acquire the systems and skills to address this new competitive environment. Research commissioned by Earnix earlier this year found that 92% of the 300 surveyed bankers believe that analytics will become critical to maintaining margins over the next five years. In addition, 71% of the respondents said that advances in analytics is the most powerful means through which to win new banking customers over the next five years.

What challenges do banks face in this regard?

For decades, banks have been trying to address the issue of siloed data, because it prevents them from understanding the entire customer relationship and serving customers in a holistic way. More recently, big data has added challenges related to processing new kinds of data and analytics tools. Looking forward to January 2018, the mandatory PSD2 and open banking initiative has the potential to redefine banking by bringing in new competitors, many of whom are masters of creating outstanding customer engagement experiences.

Bankers understand that open banking could become a game-changer. In fact, 80% of those we surveyed expect a significant increase in competition over the next five years as a direct result of open banking. For example, 72% believe that it will significantly diminish their existing customer relationships, making it more difficult to cross-sell financial services.

Our survey also showed that 73% of bankers believe predictive analytics and machine learning will become the most powerful way of winning bank customers over the next five years. Consequently, bankers need to up their game like never before – and fast. However, they have a long way to go – only 21% of our survey respondents are using predictive analytics, and just 22% are extensively using machine learning. Plus, almost 75% said that banks lack the analytical capabilities to take full advantage of the new data sources that open banking will bring.

How can Earnix help retail banks to meet these challenges?

Earnix is at the forefront of the mass adoption of advanced analytics in financial services. We provide a platform for our customers to identify relevant data so they can use it to model and predict how their customers will react to product offerings. Using our prescriptive analytics techniques, line-of-business leaders can outline their desired business results and tailor their consumer offers to meet these with greater certainty than in the past. Using techniques such as machine learning, Earnix customers are able to more quickly analyse data from a wider variety of sources and integrate the results into their business processes in real time. This ability for real-time analysis and decision making will become the standard that all industry leading organisations will need to reach over the next few years.

How do you expect the use of analytics to evolve in the banking sector over the coming years?

Whether it is the redefinition of expectations regarding personalisation, newly mandated open banking practices, or the relentless advancement of fintech, the financial services industry is on the verge entering a new era where analytics-driven business practices are pervasive. The tools and techniques are readily available and they are being adopted by most leading financial institutions. Over the coming years, the industry will overcome the skills gap for using advanced analytics, and will perfect many new approaches to providing true customer-centric services.

Earnix is working with some of the leading financial institutions around the world who see this new environment and are taking steps to refine their use of analytics so that it can become a competitive weapon. We have many case studies showing how we have driven increased revenue and profitability through an analytical approach to pricing and offer management.