Today, it’s easier than ever for bank customers to conduct most, if not all, of their bank business online, on their smartphones or at an ATM. Online services have not only transformed banking, but the entire financial services industry. In the past year, the number of bank customers who prefer to bank online has risen sharply, with sixty-two percent of bank customers saying they prefer banking online to all other methods, up from 36% in 2010.
This trend isn’t limited to younger consumers. Fifty-seven percent of bank customers age 55 and older said they prefer banking online to all other methods, up from 20% last year. While only 20% of customers said they preferred using a branch, (down from 25% last year) there are four times as many branches today as there were in 1970, and the vast amount of customer data being generated from face to face contact and through online services has led to an enormous amount of information that banks are trying to make sense from. New customer data is being generated at great speed, making it necessary for banks to implement systems and processes that can not only manage big data, but manage it quickly.
All this data has created a need throughout the retail banking industry for more, and better, quants: quantitative analysts who can analyze and uncover meaning in the data, use it to develop new business strategies and take banks into the next decade. From those with doctorates in math, physics, or math finance, to those with a deep knowledge of theory, math and statistics, professionals are finding jobs filling a need to develop new strategies and products.
Quants can assist banks in easing their shrinking profit margins by helping them to differentiate themselves through the creation of new and innovative services, essential for retail banks to generate adequate returns in an increasingly regulated and lower growth world.
Playing a new role
Generally ahead of the curve compared with other industries in terms of gaining customer insight from information, banks have not been able to interpret this information or effectively use it to their advantage or share it across the organization. But the new role of quants can enable banks to facilitate better revenue-generating opportunities with this data, and also open a direct path with customers who are comfortable providing the kind of valuable personal information that can help banks increase profits.
Through the exploitation of their data, banks will have a much better understanding of where there is a strong fit between the capabilities of the bank and the requirements of current and potential customers. Institutions are expected to gather and integrate more data on customers to support initiatives. Quants will manage the spiraling regulatory data requirements and help banks better understand customer profitability, enabling their success and their ability to differentiate themselves in the marketplace.
This will require using information obtained from customer data to create attractive new products matching customer needs and promote customer loyalty. As customers move towards digital banking and greater self-service, quants will be in the position to transform banking by utilizing the insight gained from all this data to drive segmentation efforts and similar initiatives to create the new frontier for the banking industry.