Demand for personalized banking experiences has exploded, and most banks have not capitalized. Last year, Capco surveyed about 1,000 US consumers, and 72% of respondents rated personalization as “highly important.” A December 2020 survey by Salesforce yielded similar results, with 66% of customers indicating they expect their financial institution to understand their unique needs and expectations. Unfortunately, just 27% of respondents to the same survey said that the industry is fully customer-centric. And frankly, that figure seems high. Interestingly, only 7% of banks surveyed in July 2021 by The Financial Brand said they personalize customer experiences across all channels.
Based on results outside of banking, the case for personalization of marketing and customer experience is evident. And with the shift to digital channels post-pandemic, the impact is likely more significant today.
Banks can’t personalize if they don’t know their customers: The latest data management platforms are the solution
Not surprisingly, banks cite trouble organizing data and unifying customer profiles among their most significant problems in providing personalized customer experiences.
Except perhaps for its wealthiest clients, most banks don’t collect customer behavior across products and services. But banks are starting to implement advanced data management platforms to address the problem. For example, Customer Data Profile (CDP) software is a cloud-based solution that enables companies to consolidate all transaction and account data at the customer level, feeding valuable insights across the enterprise.
Your bank’s marketing team can segment its customer base and make targeted offers to acquire new customers using a CDP solution. The consolidated customer profile can also facilitate compliance with data security and privacy regulations. For example, customers could opt out of data-sharing and marketing offers for each product with the bank. Richer customer-data profiles also inform better fraud prevention models.
Banks should also implement a Digital Experience Platform (DXP) to personalize marketing offers and customer experience across all digital channels. Various personalization models are available, so it’s critical to choose the right solution for your bank’s needs.
The largest US banks lead the market with advanced data analytics that delivers personalized customer experiences. But it doesn’t need to stay that way. Similar capabilities are attainable for banks that implement CDP and DXP solutions. And even the largest banks are not yet delivering hyper-personalized, real-time experiences.
Bank of America uses advanced data analytics to provide predictive insights that help customers manage their finances. Erica, a voice assistant on its mobile banking app, isn’t perfect but should improve. First Hawaiian Bank wanted an updated website to appeal to its multicultural and multigenerational audience. So, the bank implemented a highly secure content management system to display automated, real-time content. Chase and Wells Fargo feed financial education resources to customers based on their customer activity and searches.
Numerous studies have shown that greater personalization leads to greater engagement, increased revenue, and lower costs. However, most proof points are from other industries, with all but the largest banks being slow to implement technology that enables personalization. As a result, fintechs and neobanks may continue to steal market share if banks don’t get on board.
– David Ritter, Financial Services Strategist at CI&T