May data set you apart:
Resilience-driven differentiation in private banking 

Drastic events, challenges and crises leave most people with a bad taste in their mouths, but we can take advantage of crisis situations as opportunities for development. Various resilience factors determine who comes out stronger and who comes out weaker.

Nikolai Tsenov, Product Manager Data Analytics, Finnova Bankware AG

Spring 2020. We are once again facing un­precedented challenges because of the coro­navirus crisis. A lot of things seem hopeless and the long-term effects on society and the economy are incalculable. How can we face the crisis in banking, what are the determining factors? What is the most valuable asset of every bank and how can we make use of it?

Resilience factors make all the difference

Natural disasters, epidemics, pandemics and conflicts have always existed and will always exist. It is rarely possible to predict them. In difficult times and crucial moments like these, our ability to remain resilient mani­fests itself. This means not just the skills to survive and to deal with crises, but also the skills to use them as an opportunity for de­velopment, to take advantage and to come out stronger.

Resilience factors such as innovative capacity, resource­fulness and adaptability are catalysts, boost­ers and accelerators for this process. They are the determining factors between passive 'hoping' and active 'doing'.

Important Resilience Factors

Early gathering of information 

Reflection and solution orientation 

Resourcefulness and creative implementation  

Situational acceptance and transfer 

The most valuable asset of every bank: In-depth knowledge of their clients

One resilience factor stands out most when it comes to creating and exploring/exploiting competitive advantages in challenging times: the capacity to stay ahead on the knowledge front. Applied to the banking business this means:

an in-depth and timely understanding of your clients and their needs. This is also known as Understand Your Customer, UYC.

Let us have a look at the significant differences on how to approach this between private and retail banking.

Retail banking’s treasure: Transaction monitoring

Retail banking is more tightly linked to the everyday life of its typical customer, which is perfectly reflected in the hundreds and thousands of transactions generated. These transactions are a very dynamic source of information and give clear insights with regard to the customer lifecycle and its evolution over time.

Therefore, transaction monitoring and its smart handling is undoubtedly THE most insightful means not only to 'Know Your Customer' (KYC), but also to truly 'Understand Your Customer' (UYC) with all their risks, threats and opportunities. Transaction monitoring has become the most important and most dynamic source of information a bank can ever have.

Private banking: Do you really 'understand' your clients if you only 'know' them?

In contrast, transaction monitoring in private banking is much more limited. It is still an important concept, but based on these mainly quantitative but also qualitative limitations, it is a rather compliance-driven topic, limited mainly to the fulfilment of the regulatory Know Your Customer (KYC) requirements. Given the relatively limited amount of transactions in private banking, transaction monitoring is rather insufficient for gaining deeper insights that go beyond compliance and support the Understand Your Customer (UYC) approach.

How to make a difference: In pursuit of new UYC sources for private banking

Given the limited meaningfulness of transaction monitoring in private banking, the UYC concept must be based on other or additional sources of information.

These become obvious when we investigate the typical ways in which clients interact. Whereas in retail banking clients interact via a myriad of established digital channels, mostly in a self-service way, classic private banking clients interact much more intensively through their relationship manager. This opens up other opportunities:

  • speech and voice analysis: a good and quite reliable source, especially during interaction with the client advisor. Speech is transformed into written text (or even into structured data format) and can be easily analysed and used for sentiment analysis.

  • advanced media search (not only adverse, but also favourable media search)

  • dynamic risk profiling

  • dynamic portfolio analysis

  • predictive financial markets analysis

  • dynamic transition metrices for extensive simulation and stress testing

Used together, these sources form a holistic UYC concept. A private banking advisor can gain very precious insights about their clients and offer them the best and most suitable service.


Using the right methods in an appropriate situational context, modern financial institutions can unfold the potential behind UYC as the most significant resilience factor. They can be duly informed and in a timely manner, gain a knowledge advantage and are able to transform this knowledge into smart operational and strategic business decisions, as well as competitive market differentiation.


Read more about the new digital era in private banking in our September issue.

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About the author

Nikolai Tsenov is Product Manager Analytics at Finnova and has been with the company since 2015. He is responsible for the conceptual design and development of the Finnova Analytical Framework (FAF), a unified and holistic analytical platform that fulfils all of a modern financial institution's analytical needs. Nikolai has over 20 years of experience in the fields of data analytics, compliance and risk management.

With his main focus on banking and finance, he has worked on and managed multiple international consulting and implementation projects in the fields of fraud detection and prevention, AML and sanction screening, transaction monitoring and behavioural analysis, aCRM, Basel II/III, cross-border compliance, and product and customer suitability. He holds Master's degrees in International Economics and Finance from the universities of Innsbruck and Barcelona and is the winner of the 'Banking IT Innovation Award 2016' from the University of St. Gallen and the 'Fintech Breakthrough Award' in the category 'Best Predictive Analytics Platform 2020' with his analytical framework concept FAF.