TODAY, PRIMARILY LARGE BANKS USE BIG DATA AND ANALYTICS. Community banks mostly have shied away from them because of the perceived expense and need for specialized manpower and resources. But some community banks have embraced the concept, at least on a limited scale--arguing that valuable data collection and analysis can be achieved with minimal expense or added manpower. An example of such an institution is Extraco Banks (assets: $1.2 billion), Temple, Texas.
"We don't think of it as 'big data'," says James Geeslin, vice chairman of Extraco Banks, "It's more like 'small data'--data that many financial institutions have not yet learned how to use properly."
Retail and commercial applications
Extraco, a family-owned bank, has 19 locations south of Dallas in Central Texas. In addition to basic banking, it also offers ancillary services such as trust, insurance, mortgage and small-business technology solutions.
Like most community banks, Extraco collects a lot of customer and transaction data. But unlike many other banks, Extraco identifies and evaluates selected data and uses it to enhance marketing--and to augment revenue.
Below are two examples of ways that Extraco uses its data, one involving the retail side; the other, the business side.
Signing Bonus campaign
A current popular catch-phrase in the industry is "big data and analytics." This refers to the gathering of large amounts of customer data and its analysis by computer to uncover customer transaction patterns and trends to enhance marketing activities such as cross-selling.
One recent retail-side use of data analytics at Extraco involved a campaign called Signing Bonus, which was designed to boost interchange fees on signature-based debit-card transactions and also to graduate customers with other types of debit-card accounts into the bank's Bonus Banking account, which provides cash back on all signature debit-card transaction The program uses debit-card transaction data as the guide for financial incentives designed to encourage targeted debit-card holders to make more signature-based transactions.
For community banks, the data is already there, and many are using it for marketing in one form or another. What is different about Extraco's approach is that it is not a one-shot campaign targeted at a narrow category of debit-card holders. Instead, it scrutinizes data from the whole spectrum of debit-card customers who are offered an ongoing array of offers and incentives. The program goes beyond giving incentives to...