Data is the new oil. A relatively new expression that has gained momentum in the last 10 years mainly due to the rise of large multimillion dollar companies such as Amazon, Facebook or Apple. Like oil, data needs to be processed in order to obtain the real value. This is why data managementhas become such a key element for every industry.
Customers entrust companies with their personal data every day, but there is no information more valuable than that related to finance. For this reason, knowing how to best analyze and safeguard this data needs to become a priority for financial institutions. Consider 6 recommendations to improve customer data management, explained below.
Data Protection Regulations
Business in Africa is growing at a rapid pace, mainly due to an increasing number of investment opportunities in the region. Yet, in order for companies to blossom in the local landscape, they need to understand the local regulations. Some regulations can be managed more easily, while other severely hinder the ability of institutions to share data with third parties, among other restrictions.
There are several examples of rigorous regulations such as the new Data Protection Bill in Kenya, currently under review by the legislative branch, South Africa’s Protection of Personal Information (POPI) Act, or the European Union General Data Protection Regulation (GDPR), that came into force on May 25th, 2018.
Despite having significant differences between them, these regulations require organizations to:
- collect data for a specific purpose.
- not reuse or disclose personal information to serve a different purpose than the purpose for which it was collected.
- ensure data is kept safe and under strict security measures.
- dispose of data once it has met its original purpose, not store it.
- keep data accurate. Both regulations assert the individuals’ right to update their information and make sure it’s correct.
Although most of these regulations affect international institutions more severely because of cross-border data transfer, they also impact smaller companies. To ensure full compliance as soon as possible, it is crucial to incorporate efficient data managementpractices.
How to Improve Customer Data Management
To ensure an effective and compliant data management system, there are a few things you need to consider:
1. Have a Purpose
Data is definitely a valuable asset. Yet, between 60% and 73% of the data collected by a company isn’t actually used. Having too much data can be overwhelming and have the opposite effect to the one intended: instead of aiding decision makers, it can actually complicate their job even more, becoming unable to identify or even assess risk.
Collecting data for a specific purpose is key and in order to decide which information you need, think about how data aligns with your company’s goals, how such data will be analyzed and how that analysis can eventually help improve customer experience.
2. Understand and Comply With Regulations
Due to an increase in the number as well as in the gravity of breaches, countries have created harder restrictions on data collection, storage and processing. By ensuring compliance to any regulation enforced by countries were your company operates, you can reduce the risk of penalties.
Although the GDPR or the POPI act are limited to the EU or South Africa, if your site has visitors from such regions, even if you weren’t aiming at capturing their data, you will need to comply with that regulation.
3. Gather information ethically
Most of the current regulations rest upon the idea of protecting users from an unwanted and unauthorized use of their data. Companies that don’t respect users’ wishes or inform them about how their data is being used, generally suffer the consequences. Trust is key to building lasting relationships with clients and once that trust is broken, it is very difficult to rebuild.
By informing users about your data-collection policies and exercising full transparency, you will build confidence. A few ways to do so are:
- Asking for specific information through surveys.
- Allowing users to decide which information they wish to share.
4. Store Data in a Smart Way
Having a spreadsheet is not the most efficient way to keep customer data. By investing in a customer relationship management (CRM) tool that also complies with local and international regulations, you can keep your data in one place, secured, organized, easy to track and analyze.
By segmenting your audience, you can have a better understanding of what products or services are more appealing to them, if they are satisfied with your company and ways to improve the relationship.
5. Regularly Update Information and Monitor Metrics
Once you have established the company’s key metrics (based on the purpose of data collection, see recommendation 1), you can monitor indicators to determine whether your procedures are successful and alert you in case something is wrong. Certain metrics can also increase profitability and reduce costs, when used efficiently.
According to Zendesk, the most universal metrics for financial services company to track are data quality and policy adherence. Only in the U.S., poor data quality costs 3 trillion dollars a year, so in order to prevent poor data collection and storage, you need to establish routine procedures to ensure data is up-to-date and collected according to the established purpose.
To ensure data is preserved and kept safe from any possible breach, companies need to create and follow specific policies on how to handle and store data. These guidelines need to be followed by anyone who deals with the data. By doing this, they can avoid compromising or losing data.
6. Protect and Backup Your Data
Medium and small businesses can lose up to 120,000 dollars with every cyberincident. The best way to avoid breaches is to have a CRM tool, a backup system with strict security mechanisms and employee training sessions on how to keep customer data safe.
Backing up the data is key to ensure business growth and stability. Data loss can significantly affect a company’s future, especially due to the fact that 58% of them are not ready to experience that type of loss, and if such loss were to happen, 60% would be out of business in six months or less. Create a budget, identify the type of plan that best suits your organization, find a place to keep your backed up data and create a recovery plan to put into motion in the event of data loss or a breach.
By following these set of recommendations, smaller and medium companies can ensure their customers receive the best service possible while safeguarding their data, building a solid relationship based on trust.