Quantitative Benchmarks for the Financial Services Industry

The finance industry (banks and insurance companies) is a traditionally data abundant sector, which has always tried to play this ace to be a leader in technical innovation. On top of this, customer satisfaction is a real competitive differentiation between the variety of service providers operating in this sector, from high street banks and insurance companies to FinTechs and investment management providers.

The top two use cases — customer scoring and/or churn mitigation (to apply credit ratings and/or to predict customer churn) and customer profiling & targeting and offer optimisation — are essentially about increasing revenue and profit. The third top-rated use case, fraud prevention and detection (predicting whether new customers are potential fraudsters and assessing whether specific transactions are legal), relates more to cost reduction than to profit and margin increases. This is because being able to assess potential scams quickly and avoid false positives helps organisations reduce financial losses.

In analysing qualitative benchmarks, the most relevant is customer satisfaction, which aligns with the top two use cases for the finance industry. Following the same reasoning, in increasing customer satisfaction, organisations increase customer stickiness (reduce churn). In addition, highly satisfied customers are more willing to provide and share additional data (partly due to loyalty and length of custom), which can be used to develop target strategies for upsales and cross-sales.