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 their banks. 

This is not because of any lack of data or information since the banking sector has large amounts of consumer data at its disposal. 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 a digital space. 

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 now shows that in most banks, 90% of customer contact occurs on the phone, smartphone, or internet. 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 coupled with convenience and real-time value are a key customer demand. 

While customer expectations for value and context have accelerated over the years, banks have always been focused on the next product, offer, and pursuant action. These efforts are offering 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 the use of customer data to develop a deep understanding of the customer. This is done by 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 that they deliver the best experience. Each time. 

Clearly, 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 the way 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 is ensuring that every channel presented to the customer is the best channel. Delivering consistent, seamless, uniform, and elevated and addressing the exact needs of the customer 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 in improving interactions and suggest the next best option across channels. With data-backed insights, banks can identify ways to improve and elevate client relationships, increase customer loyalty, and reduce risks. 

Deliver unified experiences 

Delivering unified experiences is an essential part of personalization. Banks now need to look at identifying avenues through which they deliver 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 towards a consistent experience across channels and devices. 

Deliver hyper-enhanced customer experiences 

Using financial and non-financial data, banks now need to deliver contextual, relevant, and hyper-enhanced customer experiences. 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 then make their programs, offers, and processes more aligned with future customer needs and demands. They can further refine the customer experience by identifying new lending models, and irregular activity as well and develop the skill to anticipate customer behavior to stay ahead of the curve.

The road to personalization is built with data and analytics 

Research shows that “$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 need to 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.

That apart, 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 channel, whether online or offline, 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”.