Conquering the ‘Last Mile’ of Data and Analytics Transformation

Jim Marous:
Hello and welcome to Banking Transformed, the op podcast in retail banking. I'm your host, Jim Marous, founder and CEO of the Digital Bank Report and co-publisher of The Financial Brand. Banks are making significant investments in their data and analytics initiatives. Unfortunately, most organizations struggle moving from the data preparation and analytics phase to the last mile of data implementation and utilization, where insights are translated into better process changes and better customer experiences. The last mile is where the focus moves from great reports to exceptional results. At this stage, the insights generally become part of improving the internal processes and personalization that helps decision-making and improves customer experiences.

Jim Marous:
On the show today, we have Greg Spencer, Senior Sales Engineer at Segmint, an Alchemy company. Greg shares how banks and credit unions must focus on finishing strong as they leverage insights for improved results.

Jim Marous:
For a marathon runner or distance cyclist, the final mile is not only the most grueling part of the journey, but also the most rewarding. Without adequate planning and attention to details, it is tough to complete the journey. The same is true when you're using data and analytics to drive better processes and customer experiences. Banks and credit unions must prioritize the last mile of the data analytics journey and work backwards. Also, organizations must finish the journey. This means that unless the processes are optimized and the customer experience is enhanced, the entire data and analytics journey is really for nought.

Jim Marous:
So Greg, how often do you see organizations start strong with their data and analytics initiatives, only to see the entire process break down during the final mile when the rewards of doing the hard work really pay off?

Greg Spencer:
Yeah. Well Jim, it's a great question and in my experience in the industry, this happens more often than I think we'd like. Virtually everyone on their data analytics journey has the best of intentions, starting with building a data warehouse, integrating multiple data sources, delivering reports and charts and visualizations in an automated fashion to business stakeholders, that's very tangible and that's a great start but as you know, Jim, that's just really the first leg. Turning that into actionable strategies and curated experiences, workflow improvements and so forth, that takes vision and strategy upfront, and having the correct tools and technology at the end, and truly being committed to becoming a data driven organization culturally along the way.

Greg Spencer:
But the rewards absolutely pay off. Our clients at Segmint typically see an 18 to 20 xROI the first year of economic value for those that cross the finish line and use the data to activate relevant personalized campaigns and offers. It's worth the tough work.

Jim Marous:
Your background is actually working at a credit union as a client at Segmint. So it's very interesting because from your perspective, how hard was it to take the data and analytics and the vision and the insights that was provided by Segmint, and actually apply them towards better workflows, maybe better engagement within the organization, and maybe even better marketing where you could actually show the customer you knew about them, as opposed to simply making better reports?

Greg Spencer:
Yeah. It was definitely a challenge. Unwinding the way things have always been done, breaking down those barriers, it's a big undertaking. It requires dedicated resources, both monetary and human capital in order to make that happen. Data transformation is truly a cultural change. It's done over time. It takes grit and determination.

Greg Spencer:
Specific to marketing, we see institutions that have typically approached the market with a campaign calendar approach, with a high degree of product focus that's been successful over the last couple of decades to a certain degree. They hit everyone with a seasonably appropriate offering or a new product that they developed to compete in the current market. They blast it out across all channels for a few weeks and months and then shutter it down and then ramp up for the next campaign.

Greg Spencer:
But as technology and consumer behavior and preferences have evolved, what we've learned is that the problem with that historical approach is that if that is your exclusive or primary way in which your marketing and in connecting with your account holders, they're going to see right through it now. They're savvy enough to know what is fire hose marketing and what is no longer relevant to them, and if messages are not tailored to the right audience and available at the right times for them in the scope of their life cycle or journey, they're statistically less effective. What you've done, what you've accomplished is just created noise to that consumer and they're going to tune you out.

Greg Spencer:
Beyond marketing, though, I can say that putting together an effective data strategy, if you approach it the right way and you lay out your priorities and your vision upfront and you align the vision with the institution from a business stakeholder standpoint, you can achieve fantastic success across all levels of the organization. It can inform and open up efficiencies for virtually every line of business, but to succeed in the beginning as well as in the end, it's really important that you select an excellent technology provider, someone who is going to be a partner for you along the way, who's also going to be as impactful and efficient as possible, as quickly as possible without overburdening the rest of the organization.

Greg Spencer:
So allowing a partner like Segmint, candidly to do what they do best for us in my previous role was an incredibly successful venture for us. It gave us back valuable time and energy so that we could focus what we needed to do to continue to move the organization forward across the entire organization.

Jim Marous:
So Greg, do you think institutions that are not using data for improved processes and for customer personalization are actually damaging their business as opposed to simply maybe working in the status quo positioning?

Greg Spencer:
It's a very real possibility. It all comes down to relevancy and if you aren't relevant, you're either creating a bad experience with unintended consequences or it's a missed opportunity. A great example of this would be you have an auto loan campaign and you have multiple people within that audience who are in different lifestyle stages or have different socioeconomic situations.

Greg Spencer:
So in one instance, you may have an individual who is high net worth who enjoys the outdoors. What may be relevant or draw that person in maybe an image or messaging around a luxury SUC. But if you put that same message in front of another candidate within the same campaign who has student loan debt and recently started supplementing their income with a side hustle in the gig economy, that luxury SUV is probably not going to resonate. What might be better for them could be something that's more economically focused or rate driven.

Greg Spencer:
So not leveraging the data that you have and not making the experience something that is relevant to the potential account holder or prospect or customer, you're shooting yourself in the foot.

Jim Marous:
It's interesting, this is... In you working with Segmint from a financial institution basis, but also now working for Segmint, do you find that organizations sometimes hesitate in implementing programs because they don't think their data is good enough when in effect, if I'm not mistaken, Segmint can actually take what I'm going to call dirty data? I don't mean dirty as in bad data, but I mean in silos and not formatted correctly. And you can actually as Segmint put this into a format that can bring good rewards, can't you?

Greg Spencer:
Absolutely. What Segmint does at a world-class level is cleaning, categorizing and contextualizing all of those cryptic transaction strings in conjunction with the rest of the core data to build these key lifestyle indicator data tags. Those data tags become super easy to understand, they're lightweight. They're literally binary tag values that indicate yes or no. And you can leverage that in our platform to be able to create those always on campaigns, such that when people flow in and out, who meet new criteria or fall out of existing criteria, they would only see messages that are relevant if they actually meet that particular audience at that point in time.

Greg Spencer:
So you're able to leverage the automation along with this rich, cleansed, accurate and easy to understand data elements that can be brought forward to the typical marketing business user without having to write complex queries across multiple data sets, automatic nightly refreshes. It's a great setup.

Jim Marous:
So how big was the credit union you worked at?

Greg Spencer:
Just under two-and-a-half billion.

Jim Marous:
Okay. So for all of our listeners that think, "Geez, I can't do what Greg's done or I can't implement a Segmint solution," the reality is any organization of any size, the biggest and the smallest can implement this. And I will say just from my experience, your organization was punching above their weight from the standpoint of using data and analytics and driving better processes and better personalization in the marketplace. And these partnerships are key when we're talking about going forward, especially in an economy that right now is at best uncertain, where organizations really have to prioritize their investments to say, "Where can I get the biggest bang for my Buck? How can I get the lowest hanging fruit and develop ideas going forward?"

Jim Marous:
But sometimes, Greg, financial institutions are looking for a, "Can I get an ROI that's going to at least pay for the program itself so I can get a deeper investment?" So there are some organizations obviously reaching the finish line, your credit union is one. What sort of ROI have the best organizations achieved in working with Segmint?

Greg Spencer:
So for 2021, our 160 plus clients on average saw an ROI in the 18 to 20x range. Few lower, but there were definitely some that were higher, like in the 30x range, and that's not based on our metrics. That's the institution's own metrics in terms of their ROI based on the products and acquisitions that they've been able to make leveraging our platform.

Greg Spencer:
And what that does, their experiences reinforce the reality that leveraging highly informed, enriched and personalized targeting surrounding the audience across multiple channels and mediums is an incredibly lucrative strategy, especially given the scale and efficiency it provides via the automation.

Jim Marous:
So this was not just at your organization a like to have or want to have. The reality was you are generating revenue from a marketing perspective. The marketing department was actually becoming a revenue center as opposed to a cost center because it is better targeting, it's better implementation of data, correct?

Greg Spencer:
Correct.

Jim Marous:
It doesn't even take into account the efficiencies which is the other side of the equation.

Greg Spencer:
Of course, not. Exactly. When you look at it through the extension of being able to turn data into... You're activating it, right? You're actually deploying it in such a method that you're able to bring new business in, in a direct fashion without having to make a significant investment on top of that.

Jim Marous:
So AI modeling is obviously a major opportunity for FinTechs and traditional financial institutions. It is also an area that we again, talk a lot more than we actually do it. What are some ways that organizations should be considering putting emerging data technology into action?

Greg Spencer:
So for AI machine learning in our space right now, the most practical applications are for product adoption across sell, attrition or customer churn and understanding financial wellness. There's more to come and I'm excited about that but right now, these are the audience models that we're seeing deployed more frequently in ones that we're continuously enhancing ourselves.

Greg Spencer:
And because Segmint has done all of that difficult work in terms of the data cleansing, contextualization and creating that normalized and standardized data set off of all of that rich and valuable transaction data, we're able to deploy these models in a much faster fashion for our clients.

Jim Marous:
You mentioned transaction data and I've been in banking long enough to know that the one area is that we really lost as far as financial institutions was giving away a lot of the payments and POS system integrations that we used to have because that carried a lot of transaction data, but that's before we realized that transaction data be able to be processed into better communications.

Jim Marous:
So how important is transaction data and real-time engagement to the overall success of the personalization process?

Greg Spencer:
It's critical. Candidly, ultimately, the transactions that a customer is performing is giving the institution rich insights into their behaviors, lifestyles, and preferences. It's a unique source of information that financial institutions have versus other industry verticals, and it's through that transaction data analysis that FIs have these incredible opportunities for creating those personalizations and being relevant in the lives of their customers.

Greg Spencer:
Our solutions allow FIs to securely tap into audiences based on behavior going from one to many, to one to few, to one-to-one engagement, and those real-time engagements are important. Said simply, the value of most data points depreciates over time. So the closer you can get to when it actually happens, the more valuable it can become.

Jim Marous:
For most of your organizations, how often are they providing you data or is there a direct link for data that makes it so you can do the real-time communication?

Greg Spencer:
So most of our institutions are providing us data for our marketing automation solution nightly.

Jim Marous:
Wow.

Greg Spencer:
So the nightly process returns the data back with automated conversions, but we do have institutions who do it more frequently, do intra-day connections, and our merchant payment cleansing solution is real-time in that we can return dirty strings via API in real-time and allow the institution to deploy it in a number of fashions.

Greg Spencer:
Along those lines, we recently announced earlier this year, we're going to be deploying a native application within the Snowflake environment whereby institutions can cleanse transactions in real-time in their environment without having it to leave as part of that native application.

Jim Marous:
Wow. That's transformational. That's a big deal, especially for those organizations that are using real-time transaction data. We often talk when we're talking data and AI and analytics, a lot of the focus, and especially in our podcast because we're talking to a lot of marketers, is around marketing applications. I think we both agree that financial institutions are also leaving a lot of money on the table when they don't incorporate the findings, the insights into their operational strategy and fine-tuning what happens below the glass as opposed to simply above the glass.

Jim Marous:
What are some strategies that you can share on how the data and insights that Segmint can provide really helps things beyond marketing?

Greg Spencer:
Sure. So I'd start with recommending using the data to better understand consumer channel and product usage behaviors and preferences. For those of us who have been in the financial services space for a long time, we've all been guilty of this at some point. In terms of baking certain assumptions in about the use or lack thereof of our product services and channels, we sometimes have the tendency to look at those metrics and their performance in a vacuum without taking a step back and looking at the broader picture and potentially patterns that are being presented to us.

Greg Spencer:
So along those lines, one of the first areas from a tactical standpoint that I'd look at is looking at the interchange side of the house and looking for recurring or subscription payments that are happening on non-debit or point-of-sale rails and look to convert them into a revenue opportunity for you going forward.

Greg Spencer:
Similarly, I look to uncover small business opportunities where you've got consumers who are making small business or business type transactions in their retail accounts, potentially even paying a small business loan and look to see whether or not there's an opportunity to bring them over onto your business platform.

Greg Spencer:
I'd go a step further too and say I would take and use Segmint's cleansed and enriched and highly contextualized data tags as an enhancement to existing product and customer channel portfolio reporting and analytics, from a competitive and SWAT type analysis. So as an example, in the typical community financial market, there's always been a high interest in looking at average number of products or services per household or per customer.

Greg Spencer:
What I would do is I would look to add the data that Segmint is providing back and look at it through the lens of what's the average number of competitive products that the customer is using within those product and channel and average customer type of reports look like? And because the question behind the question here becomes why are they doing this? What is it about your products and your delivery that can be improved to get in front of this?

Greg Spencer:
The short put here obviously is marketing to them from a wind back standpoint, but operationally speaking, it can give you greater insight into both weaknesses and opportunities within your four walls.

Jim Marous:
It's interesting, we were talking to somebody on a podcast earlier this year that said that they looked at analytics to determine where did funds flow go after the government gave some help with the checks that came to the household during COVID? And they found that even though we all got really excited about the amount of deposits that were made, a lot of transfers were made to companies like Robinhood and SoFi and other players in the marketplace as you just mentioned.

Jim Marous:
How important is it to look at funds flow as well, more than just transaction, but flow of funds in and out of an organization, again, to know who's eating my lunch?

Greg Spencer:
Yeah, it's very important, right? Because you're not just concerned about the big players, the known entities that are out there. It's also about the challengers and the disruptors and those that are coming into market that are growing share away from you. So that's where you can start to leverage the data beyond just from a marketing standpoint and look at it more through the analytic lens to start to look at which areas or which competitors within certain categories are growing faster than we are, or we're seeing a further degradation or outflow of funds from a disintermediation standpoint to these other channels. What do we need to do to start to position ourselves differently?

Jim Marous:
It's interesting. As good of a service that you provide and all the answers you provide and you've mentioned 200 and some clients and all the winning strategies you come to the marketplace with and can share with other clients, the challenge sometimes is the best you can bring to an organization really depends on how the organization actually accepts it or what kind of roadblocks they may put in the way for you actually implementing what you want to implement.

Jim Marous:
Now, you've been on both sides of the desk now and you understand probably more about, "Oh geez, we were like that," or, "Oh geez, thank goodness we didn't have that roadblock," but what do you see with your clients where you say, "Geez, if they didn't put this addendum to it, if they didn't say, 'Oh geez, we'd like to do what you said exactly, but we have some back office things we want to hold onto,'" what are some of the things you've seen that really make it so they don't get the best of what Segmint can provide?

Greg Spencer:
Yeah, I think there are always going to be challenges within specific organizations and how they're structured and their culture and their previous technology investments. I think that in addition to trying to overcome and explain to them the art of the possible and what is available once you have this data and get them going, you still need to understand that there are places and investments that they've made that are going to look competitive to them, and there's always going to be that struggle of, as I think I mentioned, the previous ways of doing things, change is hard.

Jim Marous:
Oh, got you.

Greg Spencer:
It is one of the biggest things. So I think being able to talk about the true impact and the ROI from our clients is probably one of the best use cases, so to speak, that we can talk to potential prospects or others who are looking in the space because once you take that step, once you take that leap, the rewards are going to be there for you. We've seen it, it's been repeated by our customer base year over year. Our renewals are fantastic.

Greg Spencer:
So I think there's no silver bullet answer to your question, Jim. I think it's part of maintaining that ongoing dialogue and figuring out within their four walls, what makes sense for them? Typically, the Segmint solution, we don't like to call it as something that's a rip and replace-

Jim Marous:
Right.

Greg Spencer:
Because there are different stopping points along the way that you can use to... and you can kind of baby step so to speak, in terms of do you just want the cleanse transactions or do you want the key lifestyle indicators? Do you want the models or do you want the full marketing automationcy?

Greg Spencer:
There's no one-size-fits-all that needs to be thrust onto an institution. It really is about making sure that they're getting the value that they need at that time and that we're accurately presenting just how valuable the data actually is once we provide it back to them.

Jim Marous:
You just brought up a really good aspect of what I see happening in the marketplace in that, let's say even a year-and-a-half ago, a year ago, certainly before the economy is starting to turn south, organizations were selling, "Here's our total package, we'd like you to take it all." And you just referenced the fact that a customer can come in and say, "I want this component or this component or this component," as opposed to the whole thing.

Jim Marous:
A lot of this gets down to the importance of speed and scale. Compared to when you were at the credit union and even what's happened in the last year, how important is speed and scale to the implementation and at the actually implementation and diversification of the products come into the marketplace? How important has that become?

Greg Spencer:
It's become very important, and especially when you're talking about a large financial purchase or technology decision for an institution. Getting those quick wins and not overburdening the institution from an onboarding perspective is super critical. And candidly, with the relationships and the partners that Segmint has out in the market, they do it very, very well in terms of being able to stand up an institution with the full insights and the platform in less than two months.

Jim Marous:
Wow.

Greg Spencer:
And that is fully ingesting a year's worth of transaction insights to build some of those trends and behaviors, and to have channels integrated for the institution without having to add to staff. It's pretty significant.

Jim Marous:
You bring up an interesting point, and I won't bear on it too hardly here, but I was recently at an event with a bunch of financial institutions and you're talking about being able to implement in a couple months. We had major financial institutions at this event that said, "Just the review of solution providers takes five or six months." And I said we all have to think completely differently than we've ever done before because by the time you make that decision, the decision may not be good anymore.

Jim Marous:
And actually, it's an example that I lived with during people trying to determine what digital banking platform they'd use, and I realized that organizations were taking 18 months to determine who to use, when if they had made the decision on the day the decision-making started, they would've made more money, made a bigger impact in the industry and in their marketplace if they had made the decision faster. So I think people listening, again, I'm going to keep on saying it probably every podcast, the important speed and scalability is of utmost importance.

Jim Marous:
So a little bit of a pivot here, Greg, Segmint was recently acquired by Alchemy earlier this year. What enhancements did this bring to the table, especially when it comes to helping organizations conquer that final mile of data utilization?

Greg Spencer:
Sure. So to say that the Segmint and Alchemy teams are excited about the companies coming together is an understatement. The power and flexibility that this union is going to provide the mutual clients, it's going to be significant. Providing the ability to serve and deliver those highly relevant personalized offers and experiences based on their behaviors and transactions throughout the digital banking platform experience is something that we're all looking forward to.

Greg Spencer:
And candidly, that supports Alchemy's recent national study that was done in partnership with the Center for Generational Kinetics, that among the many key findings was that respondents said the number one requirement for choosing a financial institution was a good website and banking app. So combined with the continuously growing expectation of that personalized experience, we believe that the combined power of Segmint and Alchemy meets these needs head on for financial institutions, the ability to serve those relevant and timely content and messages and offers within the Be best digital banking experience the market has.

Greg Spencer:
Ultimately though, the Alchemy acquisition of Segmint benefits financial institutions well beyond the integrations. The combined data sets between the two companies will provide users a much more complete view of their account holders while both training Segmint's current data models for greater precision and expanding them to additional use cases. And FIs will then be able to leverage this data throughout the rest of their digital properties with relevant content.

Jim Marous:
It's also interesting, you sound familiar with Alchemy. And your customer base, your financial institutions customer bases are very aligned from a size perspective, from a focused perspective, what you're trying to achieve. And that always helps in a merger of companies that have aligned strategies but deal in different parts of the business. So that's going to be exciting to see what happens.

Jim Marous:
Greg, it's interesting because you have again, the perspective of both the financial institution and of the solution provider now. What industry breaking trends do you see happening in the next one to two years that are going to really change the dynamics of how you can provide solutions to the marketplace? And just as importantly, if an organization was going to start today, where should they start?

Greg Spencer:
Sure. So I think first, from my seat, I think the pace of continuous disruption is going to remain high. It wasn't very long ago that we were all focused on the non-traditional competitors and text stalwarts like Apple and Amazon and Google and Walmart becoming banks. And that's still true, that's still a threat, but I think the tenor of the dialogue now has changed and has shifted to being less about who the competitor is and more about do we truly understand what competition is? What is it that we're competing for?

Greg Spencer:
And regardless of whether or not you look at that dilemma through the lens of low cost deposits or payments or money movement or lending, the reality is it's going to come down to consumer behaviors and preferences, and making sure that you're there in the consideration set when their decisions are being made. So regardless of which side of the fence you sit on as it relates to the future of banking as a service or embedded finance or decentralized finance, I think that as lessons are learned from some of these early market entries, some of the fault starts that have been out there, I think that the new entries will be... the revised providers in the space are going to do much better. And I think that financial institutions are going to be affected in more ways than one.

Greg Spencer:
Last but not least, I'd say that the rapid acceleration of not just data, but backend technology infrastructure to the cloud is not likely to slow down in the near-term. The ability to connect multiple technologies to the same data pool and run multiple applications and systems on top of it without degrading performance is an emerging competitive edge. It's one of the reasons why Segmint has partnered with Snowflake with our merchant payment cleansing solution in the native app because we believe that there's much more to come in this space.

Greg Spencer:
So I think if I were to boil it down to what should an institution be doing today, I take a temperature internally to figure out where does the institution currently see banking as a service, embedded finance? And be prepared as this shift continues to move towards the whole open banking environment, where and how do you want to prioritize your resources to protecting your base?

Jim Marous:
Boy, Greg, you said a lot in that one segment, and so important because I think we both know that embedded finance, banking and service and all that is number one, it's going to be part of every one of our organizations. Number two, you can't do any of that without using data analytics to streamline your back office first and also make better customer experiences because you'll have nothing to compete against or compete for. You won't have that differentiation that you need.

Jim Marous:
And most importantly, I think your key message there was you got to do it now. You can't keep on waiting for the next train because the trains loves the station already. We're all playing catch up. And it's important in knowing that if you can find the right data analytics and implementation partner, you're going to be able to reach that final mile at full speed and actually go, as I say many times, go beyond great reports to fantastic experiences and that's a revenue game. That's not a cost-cutting game, that's not a nice to know type scenario. It's really the differentiator that's going to make a difference in the marketplace going forward.

Jim Marous:
Greg, thanks for being on the show today. You've been a great guest and really provided insights. It's always good to have somebody that's jumped sides to the desk. I did that and in fact, very similar to you, I went from the banking world to the direct marketing world. So in an old school way, I kind of did the same thing, but as you're finding out, it's kind of a big play box to play around. It's kind of nice.

Greg Spencer:
Yeah. Well, thank you Jim for the time and opportunity. It was a pleasure meeting with you.

Jim Marous:
Thanks for listening to Banking Transformed, the winner of three international awards for podcast excellence. If you enjoyed today's interview, please give our show a five star rating on your favorite podcast platform. Also, be sure to catch my recent articles on The Financial Brand and the research you're doing for the Digital Bank Report.

Jim Marous:
This has been a production of Evergreen Podcast. A special thank you to our producer, Leah Haslage, audio engineer, Sean Rule Hoffman and video producer, Will Pritts. I'm your host, Jim Marous. Until next time, remember, it's not about how much you know about your customers. It's about how much your customers know you know them.