In-life customer monitoring: the challenges and opportunities for financial organisations

January 20, 2021
In-life customer monitoring: the challenges and opportunities for financial organisations

With a volatile market, are you monitoring your customers' health as closely as you should be? And are you aware of the potential risks to your business and brand should the worst happen? 

Important questions that are extremely pertinent as we begin the new year in another national lockdown deepening the financial struggles of this country’s small businesses.

According to recent research by the Federation of Small Businesses, a staggering 250,000 small businesses will close in the next 12 months - a new record if true. 

The study also found one in five firms reduced headcount in the three months leading up to December and one in seven expect to do the same in the next three until the end of March 2021.

So, when you’re a financial institution working within the SME sector--a notoriously difficult sector to collect critical business or financial information from at the best of times--how confident are you that you’re across any potential changes to your customers that could impact your business? 

In this article we take a look at some of the challenges financial institutions have in effectively tracking customers and explore the benefits of doing it well.

Technical challenges and fragmented data

The ecosystems of tools financial institutions have elected to deploy often culminates in a tangled web of complexity where systems don’t communicate as effectively as they should.

This means that fragments of information are kept in separate locations and building a real-time view of customers is extremely hard. 

An inability to work from a single source of truth combined with a lack of trust in the accuracy or recency of the data contained within it adds a further layer of difficulty. 

How can you help your customers if you don’t know their current circumstances? And how can your customers update their records effectively when information is scattered?

Create an ecosystem centred around a single source of accurate data about your customers and keep it updated regularly.  

Too many customers to manage them all effectively

Some financial institutions have an enormous number of small businesses they work with. And, the more customers you have, the more difficult it is to keep on top of changes.

When the market is as tricky as it is right now with many external factors influencing it, even relatively small fluctuations can have significant ripple effects throughout your customer base. 

Are you confident your relationship management team is across every single change? Can they possibly be?

How can you be confident you’re doing all you can to keep on top of any shift in your customer base?

Missed opportunities for growth

While this article has been a little on the pessimistic side, there are some upsides from tracking your customer base with greater efficiency and accuracy. Growth opportunities.

Current market conditions are terrible for some, but there are specific sectors that have triumphed. 

Are you aware exactly which of your customers have been thriving over the past 12 months and have you been able to offer them new services when they needed them most? 

But it isn’t just about individual companies, it’s also about spotting growth markets and being agile enough to react at pace. 

Without a cohesive system in place and some kind of alert system to give you early signals of major changes in your customer base are you prepared to capitalise on new opportunities? 

The need for KYB for Life

While knowing who you are doing business with is a regulatory requirement, many financial organisations don’t maintain this deep level of understanding among their customer base for the life of the engagement.

What happens if the ultimate beneficiaries of the organisation change just a few months after the check and dramatically alter the risk profile of the business? 

What happens if one of your customers loses a key client that accounts for a large percentage of its revenue? 

Are you able to spot when the directorships associated with the business are resigning, clearly signalling the company is shrinking? 

Financial organisations need to find ways to better monitor their customers throughout their lifecycle. It is no longer acceptable to conduct a check when you onboard and then don’t follow up again for months or years. 

Now is the time for in-life monitoring to become a critical part of your business - not just to mitigate risk, but to help you identify opportunities as well.

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