Are “personalized experiences” a bridge too far for banks?

It’s sad but true that most people today expect more personalized service from their coffee shops than from their banks.

This is not because of any lack of data or information since the banking sector has large amounts of consumer data. At last, this industry has also realized the need for personalized experiences. Customer experiences are on the way to becoming the final frontier to drive competitive differentiation. Identifying avenues to reimagine the banking experience thus becomes essential. This couldn’t be timelier as global events increasingly influence customer expectations and habits as the world becomes digital.

The good old days of banking, where the branch manager knew all the customers and provided personalized attention and service, are far behind us. Research shows that 90% of customer contact occurs on the phone, smartphone, or internet in most banks. As customers choose digital-first interactions, delivering personalized digital experiences and meeting customer demands at scale become crucial capabilities.

Customers today also want a personalized and consistent experience across all touchpoints. Predictive and proactive financial experiences, convenience, and real-time value are key customer demands.

While customer expectations for value and context have accelerated, banks have always focused on the following product, offer, and pursuant action. These efforts offer diminishing returns in today’s business world since these are very marketing and sales-focused and often short-sighted. Usually, banks are not meeting customer expectations, let alone exceeding them.

What is personalization in banking?

Personalization in banking refers to using customer data to develop a deep understanding of the customer. This is done using a 360-degree view of their history, preferences, intent, and context to curate, frame, guide, extend and enhance customer interactions.

Banks need to consider the full breadth of customer experience with them and ensure they deliver the best experience—each time.

Focusing on personalizing customer experiences is a strategic way to drive competitive differentiation. But it is also necessary to create customer loyalty and promote brand advocacy, as 72% of customers rate personalization as ‘highly important’ in today’s financial landscape.

Merely having an account-centric view of the customer no longer suffices. Banking needs to introduce a radical shift in how the customer is engaged. The customer is not just a collection of individual accounts anymore. As such, banks must now see the customer as a whole person and involve thinking about customer journeys holistically and not completing transactions.

Improving customer value

Knowing your customer means more than knowing the transactions a customer conducts. It now means developing the capabilities to turn customer knowledge into real-time action that can deliver value. By proactively identifying customer needs and enriching the existing relationship, banks need to tailor every action and interaction with their customer to drive customer value.

It’s not about omnichannel – it’s about the right channel

Yes, banks need to deliver omnichannel experiences. However, many banks are so far taking a myopic approach towards omnichannel. Omnichannel is not just about enabling different channels; it ensures every channel presented to the customer is the best. Delivering consistent, seamless, uniform, and elevated and addressing the customer’s exact needs regardless of how the customer approaches the bank is now non-negotiable.

Optimizing interactions

Personalization is not just about offering the best product or service. It is about enhancing interactions and personalizing all interactions across the customer journey. Technologies such as AI-based analytics help improve interactions and suggest the next best option across channels. With data-backed insights, banks can identify ways to enhance and elevate client relationships, increase customer loyalty, and reduce risks.

Deliver unified experiences

Delivering unified experiences is an essential part of personalization. Banks must identify avenues through which they provide proactive customer service and create a future-proof channel-less service environment that adapts as the channels evolve. Breaking down the channel silos and creating end-to-end customer journeys with the right touchpoints can contribute to a consistent experience across channels and devices.

Deliver hyper-enhanced customer experiences

Banks now need to deliver contextual, relevant, and hyper-enhanced customer experiences using financial and non-financial data. They can reaffirm their role as trusted advisors in the customer’s life by leveraging insights from customer data. Technologies such as AI drive personalization a step further and give banks insights into how these needs could evolve. With such information, banks can align their programs, offers, and processes with future customer needs and demands. They can further refine the customer experience by identifying new lending models and irregular activity and develop the skill to anticipate customer behavior to stay ahead of the curve.

The road to personalization is built with data and analytics

Researchshows that with “$100 billion in assets that a bank has, it can achieve as much as $300 million in revenue growth by personalizing its customer interactions”. Banks must develop their capabilities to do personalization right to leverage the benefits. While banks have been active in collecting customer data, the value of the data usually lies locked in proprietary systems and siloed processes.

Banks must identify ways to modernize their legacy platforms and processes to accommodate new technologies such as AI and advanced analytics while keeping security uncompromised. Implementing the right data lakes and connecting all processes to ensure a 360-degree view of the customer while maintaining regulatory compliance are areas to mitigate to move ahead in the personalization race.

Given the dawn of the digital era, rendering relevant, contextual, and highly personalized products and services are imperative. Delivering personalized products complemented with tailor-made experiences through the right online or offline channels are becoming essential contributors to business success. However, to do so, banks need to make the best use of their data, connect the right data points, and rely on advanced analytics to win the personalization game. Let’s talk about the benefits and challenges of “personalization.”