How real-time data can empower hyper-personalization in banking

July 20, 2021
5 min read

Co-authored by Zafin and Codat

Successfully running a small business requires significant time and effort. It’s no real surprise that the New York Enterprise Report found small business owners work twice as much as regular employees. Other research indicates that 91% of small business owners spend up to 20 hours per week on financial admin, from handling payroll to invoicing and purchasing inventory.

As the effects of the Coronavirus linger on, businesses owners are under increasing pressure to stay afloat, regain sales traction while also successfully managing cash flow and taking care of employees.

Obstacles to maintaining credit

For SMBs, keeping up with their finances is crucial for ensuring access to credit when they need it. Business owners bear the burden of maintaining and supplying vast amounts of information, much of which is not readily accessible. Even with that information, banks make lending decisions based on a narrow scope of what’s supplied by the SMB, which only provides a snapshot of a single point in time.

Manual document collection is painful and time consuming for both sides. Recordkeeping is cumbersome and can be incomplete, leading to information gaps that take time and resources to research.

Banks are often supplied with static data relating to a specific time period and lacking crucial context. Is the business trending upward or is it declining? Without additional detail it is difficult to know. In a rapidly changing business environment, access to real-time data is imperative. Without it, banks are putting themselves at risk.

Likewise, pricing for credit tends to be static and rarely reflects the current operating position of the company, thereby adversely impacting the bank’s return on risk-weighted assets (RORWA) or the borrower’s cost of funds (CoF).

Banks embrace SMB financial wellness

While banks recognize the value of small businesses to the global economy and want to help ensure their financial wellness, the ability to detect risks and offer proactive solutions has been impaired by a lack of timely access to data which can be harnessed to identify proactive solutions.

In an ideal situation, financial institutions would have complete visibility of an SMB’s entire financial position across deposits, loans, income, and expenses. With this comprehensive view, banks could extend personalized offers that would truly resonate with SMBs.

SMBs that showcase improved financials might be moved into packages to help them save money or lower their cost of funds and thereby directly impact their bottom line. Conversely, if the SMB’s finances are deteriorating, they could be moved into a more appropriate product that avoids fees or other balance requirements. The key to making these personalized offers is data.

More data empowers greater personalization

Combining accounting information with the bank’s own data expands sightlines into the performance of a business dramatically. Having a 360-degree view of a SMB customer helps banks better serve them. It also informs the bank about the financial health of the customer and the risk the SMB adds to the commercial portfolio.

Automation removes the heavy lifting for both the bank and the SMB when it comes to accessing up-to-date data. It delivers extensive, rich detail without the frustration of manual document collection.

A win-win situation

The benefits of powerful data integrations are multifaceted and extend to both the financial institution and their SMB customers:

Less work, faster data exchange

Potential friction between the bank and SMB is reduced as banks receive required information faster, with little manual work required from the business owner.

Accurate, more comprehensive data

Banks have greater confidence in data transmitted directly from accounting software. When combined with bank data, trends and projections are exposed, indicating an upward trajectory or highlighting areas requiring further investigation.

KYC – Know Your Customer – personalize offers

Things change for SMBs regularly, and the loan or deposit package they currently have may no longer serve them well. Regular reviews, based on all the data, allows banks to determine if an SMB is in the best possible package for them on an ongoing basis. With the promise of ongoing reviews and positive offers, SMBs will be more compelled to willingly offer their data.

Freedom and control

SMB owners remain in control of their information at all times, choosing what data is shared and its frequency. SMBs can rest assured that their application is being assessed using their most accurate and up-to-date data, free from human errors.

Where do banks begin with data integration?

First, banks need a platform that displays a 360-view of their customers as well as product and pricing information in one place. Zafin’s cloud-native SaaS product and pricing platform is a powerful addition that’s layered on top of a bank’s legacy core systems. Zafin provides a comprehensive view of the customer as well as the ability to build new products and pricing in months, not years.

Codat connects SMB’s accounting, eCommerce, point of sale, and online payments software with banking systems to facilitate the two-way flow of information.

The use cases for a Codat-Zafin integration for banks are numerous. In addition to delivering a superior customer experience, reviews and other workflows become seamless and simplified. Banks gain the data needed to become a true partner to SMBs, not just a place to clear transactions or access cash. Offers and recommendations can be hyper-personalized to the business’ unique needs, strengthening the overall relationship with the SMB.

Keep an eye out for our next blog which will explore the ways in which automated data integration can simplify the SMB onboarding experience.

Founded in 2002, Zafin offers a SaaS product and pricing platform that simplifies core modernization for top banks worldwide. Our platform enables business users to work collaboratively to design and manage pricing, products, and packages, while technologists streamline core banking systems.  

With Zafin, banks accelerate time to market for new products and offers while lowering the cost of change and achieving tangible business and risk outcomes. The Zafin platform increases business agility while enabling personalized pricing and dynamic responses to evolving customer and market needs.   Zafin is headquartered in Vancouver, Canada, with offices and customers around the globe including ING, CIBC, HSBC, Wells Fargo, PNC, and ANZ. 

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