Research: Data Mining Aids Financial Services ConvergenceThe blending of products and services from financial services companies will continue to increase over the next three years and the sharing of customer information between partnering companies will fuel the trend, according to research firm Mentis Financial Services.
Mentis, Durham, NC, identified banking, insurance and brokerage in its Strategies for Managing Resources and Technology program as the three segments where convergence will occur. Mentis analyst Brad Adrian said data mining and customer relationship management strategies will be critical in helping these companies acquire a larger share of the customer's wallet.
"They will have to know more about their customer and more about their specific needs,'' he said. "Collecting information from whatever sources are available is going to be important.''
While technology has made more information available to consumers and made it easier to conduct financial transactions, Adrian said personal financial advice in the form of branch visits or call center support will continue to shape consumer decisions.
Convergence has been aided by legislation that has eliminated many of the barriers separating banks from brokerage firms and the landmark merger of Citicorp and Travelers Group, he said. While he predicts continued merger activity, partnerships also will drive the trend.
Mentis has identified a trend of insurance providers partnering with small banks to sell insurance products to their customers. These agreements involve the sharing of customer information -- either through reciprocal agreements or, in some cases, cooperative data mining of the combined customer pools. In a Mentis survey of insurance providers, 30 percent said small banks provide a tremendous sales opportunity while an equal number saw banks as a threat to their business.