How Data-Driven Personalization Can Benefit Banks
Industries the world over are seeing the benefits of offering their customers personalized services and marketing. Personalization is not simply a gimmick, but something consumers actively desire — and they seek out brands which can provide it.
Banks have been targeting personas and microsegments for many years now. Until recently, these low-level personalization efforts have been sufficient to act as a brand differentiator. However, in recent years, the more advanced data-driven personalization being pushed forward by big brand retailers and tech giants is leading the banking industry to rethink the effort it puts into these factors. These companies put personalization at the center of their business models and use it to drive intelligent and significant business gains.
How, then, can banking brands revolutionize their own personalization efforts and emulate the retail industry to reap its benefits?
Personalization
With recent data suggesting people would be happy to switch to a tech company if it began offering banking services, it's important to analyze what some of the reasons for this may be. 33% of customers who abandon business relationships do so due to the lack of personalization, while 91% of consumers are more likely to shop with brands who recognize them, remember them, and provide them with relevant offers and recommendations.
With these companies making personalization a core part of their business, it may provide the answer to this question.
Personalization is important because it taps into the customer's desire for expanded choice and options. However, too much choice can leave customers feeling overwhelmed — it's far from unheard of for them to abandon a shopping process because they were simply unable to make a choice. It's into this gap that personalization steps, ensuring customers have the choice they desire, but that the amount of choice doesn't leave them feeling bewildered.
"Contextual banking through data, AI, and machine learning can help to avoid this by allowing consumers to filter out irrelevant options," says industry commentator Cedric Jeannot, PhD, in a LinkedIn blog post. "Contextualization leverages data to uncover relevancy factors that relate to not only an individual consumer but can also identify the factors attributable to a unique product or service offering. Interestingly, 83% of consumers are willing to share their data to enable a personalized experience."
In light of recent stories in the media about high profile data scandals, it may seem surprising to some that so many customers are still happy for brands to use their data. Of course, the additional protections offered by regulations such as Europe's GDPR go some way to restore confidence in how brands are able to store and use data, but it also illustrates the deep desire for personalized services.
Next, we'll look at some banking brands which are already using personalization in their offerings and see if we can gain some inspiration from them.
Personalization in Banking
Wells Fargo is one such brand which is ahead of the pack in this department.
Using the enormous volume of data gathered from its customers, Wells Fargo has enhanced its ATM service to include personalization. When customers log into a Wells Fargo ATM, they are greeted by a customized welcome screen based on their previous banking activity. A favorites tab lists their most-used transaction options, enabling them to quickly select the service they require instead of navigating the menus. The ATMs also come complete with a tool which provides a graphic display of the user's cash withdrawal activity over the month, further enhancing the customer experience.
Personalization is also being used to offer bespoke product recommendations based on a customer's data. If the customer has been searching for or inquiring about loans or mortgages, the bank can display offers on their smartphone apps and online portals which will hopefully help them find a product which suits their needs. Searching for financial products can often be a confusing process and can leave people feeling overwhelmed, so any efforts which can help reduce this feeling is likely to be welcomed.
"Contextual banking can be described as servicing the customers where they are, with more accessible data to influence customer behavior," continues Jeannot. "As AI technology improves and banks become digitized, we can expect contextual banking to be a core element of retail banking. The concept itself is not a new one, it is simply a reiteration of traditional customer service in new, modern, and much more data-driven formats."
Away from practical personalized banking services, some banks such as UK-based Atom Bank allow their customers to customize the look and feel of their smartphone app - even going so far as allowing them to personalize the logo.
Final Thoughts
Personalization has the power to transform the customer experience for banking customers. As the technology powering personalization improves, a bank's ability to better serve the financial needs of its customers will grow in kind.
Personalization is set to be a hot topic at Future Branches 2019, taking place this November at the Hilton Austin, Austin, TX.
Download the agenda for more information and insights.