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Oct 5, 2020

New Customer Shockwaves Drive Need for Personalized Customer Experience (CX) in Banking

Banks have experienced several financial shockwaves over the last 10-15 years, among them the housing collapse and the Great Recession as well as regulatory compliance changes. Banks of late also must contend with customer shockwaves driven by remarkable increases in preferences for digital channels and expectations for a seamless personalized experience across physical and digital touchpoints.

The introduction and popularity of digital-only banking products disrupted the industry for a time, but an intuitive mobile banking app is now table stakes for the digitally-savvy consumer who expects a holistic omnichannel journey across channels and products.

Issues many small business owners faced when trying to secure Payment Protection Program (PPP) emergency funding through large banks is an example of the disconnect between the experience that consumers expect and what is being provided.

Many small business owners, like this owner of an ice cream shop, or this owner of a small marketing firm, turned to small or midsize community banks after being ignored by a larger bank where in many cases they had been customers for years. According to the Small Business Administration, banks with less than $10 billion in assets accounted for 45 percent of loans granted under the PPP, while banks with assets of $50 billion or more accounted for 36 percent.

A common complaint from many small business owners was that the larger banks did not show that they valued them as long-term customers. Instead of a personalized customer experience, they were given the cold shoulder.

Bank Customers Frustrated by a Poor Experience

Customer frustrations with large banks highlight the opportunity for small, community banks to differentiate by quickly responding to customers’ needs. And customers’ willingness to quickly abandon a large bank specifically because of one poor customer experience should also serve as a stark reminder to any bank of the overall value that customers place on experience.

A McKinsey report on remaking the banking customer experience after coronavirus concludes that “doing the right thing” by the consumer is a competitive advantage. Investments in CX, it said, already an imperative, have become even more relevant during the pandemic. In an analysis of 23 publicly traded banks, the half with a high customer satisfaction score delivered 55 percent higher returns to shareholders between 2009 and 2019.

Blazing a Digital Banking CX Trail

The McKinsey report identified the improvement of the digital banking experience as an important way to close the gap between the experience a customer expects and the one delivered. The article points out that roughly half of US banking customers engage digitally infrequently or not at all, thus the incentive for banks to pivot to a digital-first mindset has trailed other industries.

According to a report from the Financial Brand, banks are failing to keep up with consumer expectations for a seamless digital experience (especially as it pertains to lending) for many reasons, particularly a resistance to change or reluctance to accept risks combined with the prospect of a digital transformation overhaul. However, digital trailblazers such as Ant Group, which revolutionized banking in China in just a few short years, show that customers are indeed primed for a digital-first experience. Ant Group, the largest fintech company in the world, provides digital financial services in payments, credit scoring, lending, insurance and wealth management – managing $560 billion of wealth.

Ant succeeded in part by taking a sledgehammer to conventional banking norms, where it is not just data or channel siloes that make it difficult to provide a seamless end-to-end customer experience, but also product. US banking customers know that, with few exceptions, home loans are separate from auto loans, which is separate from lending, etc. Ant’s digital platform encompasses a single financial view, with an intuitive app that allows customers to easily manage wealth, invest in money markets, view and use perks related to their up-to-date credit score, and even order food. Often called a “financial supermarket”, Ant Group is preparing for an IPO this month.

Personalization Will Close the CX Gap

One banking executive, the head of Consumer & Community Banking Technology at JPMorgan Chase, asked to define the biggest gap between consumer expectations and what banks delivered, said that it comes down to the personalized customer experience. “Personalization driven by an effective usage of analytics is therefore, in my opinion, the biggest gap that the banks need to continue to bridge quickly in order to be able to effectively compete and win in today’s world,” says Sonia Wedrychowicz. “The world that is dominated by non-banking players (Amazon, Google, Netflix, etc.) that started from the customer-centric mindset and have mastered over time.”

What might such a personalized banking experience look like? For starters, like the increasingly popular buy online, pick-up in-store (or curbside) service in retail, it would combine digital and physical touchpoints. Again, with few exceptions, a visit to a physical location is usually its own process. If one had to deposit a large amount of cash, for instance, it’s accepted practice that filling out a deposit slip and completing the transaction would all have to be done at the bank, rather than simplified by starting the process on a mobile app.

Becoming More Ant-Like: Opportunity Abounds for Banking Personalization

Adopting a more consumer-driven experience applies to any customer-facing experience, such as applying for a home equity loan or a mortgage. Why can’t a bank unveil an Ant Group-like app that provides the customer with an easily accessible customized dashboard to carry they through the process? Or use the trove of transactional data to enhance the CX by, say, personalizing fee communications and/or actions. If I’m a direct deposit customer who exceeds minimum balance requirements, the bank could easily show that it values me as a customer by how they charge or communicate fees – instead of taking a one-size-fits-all approach and trying to hide the fee hike in the small print of my monthly statement. Or, for a more data-driven approach, sentiment analysis might indicate a likelihood to churn, in which case the institution could or offer some other benefit to increase retention.

A Single Customer View and the Personalized CX

Digital banking enhancements that become part of a holistic customer experience requires having a single view of the customer – across all channels, touchpoints and products. A single customer view, also known as a golden record, includes customer data from every source and of every type (first-party, second-party, third-party, unstructured, semi-structured, structured), and is updated in real-time to provide marketers with an accurate, up-to-date unified customer profile.

A single view eliminates data siloes that contribute to a fractured experience – such as not being able to start a mobile cash deposit at home and finish it inside a physical bank. With a single customer view, automated machine learning and intelligent orchestration, a banking institution could easily use sentiment analysis, as one example, to decide on a next-best action for an individual customer based on the totality of that customer’s interactions, behaviors and transactions across every device and ID.

Keep Up with the Banking Customer: Play the Real-Time Game

Real-time decisioning breathes life into the golden record by enabling marketers to keep pace with the customer throughout an omnichannel journey. Because the golden record is continuously updated with real-time data from any conceivable source, a banking institution can proactively engage with a customer wherever the customer appears. In the sentiment analysis example, one churn indicator (a negative social post) may trigger a different response than a different churn indicator (a reduction in deposit frequency) based on that specific customer’s identity graph; real-time decisioning permits the bank to respond at the exact cadence that will optimize the customer’s journey. That might mean sending an immediate email to one customer to alert them of a fee change, while another customer receives an SMS in three days that offers a better rate on an auto loan.

The One-Size-Fits-All Approach is Yesterday’s News

Rolling out a mobile banking app may have been a revolutionary banking CX a decade ago, but the playing field is far more equal today. The customer expectations now go well beyond easy, intuitive mobile banking (and to avoid having to go to a physical location except when necessary). The expectation is the same as it is in every industry – that a customer’s bank recognizes the customer as an individual regardless of digital or physical interactions and across products and channels.

This is what Redpoint delivers with the Redpoint CDP, which provides the single customer view that is the basis for a personalized customer experience that customers value ahead of price and largely commoditized banking products that fail to provide competitive differentiation. Because it’s now possible to know everything there is to know about a bank customer and to tailor a journey according to an individual’s preferences and behaviors, an impersonal, cookie-cutter offer may be worse than simply ignored, it may drive a customer to a bank with a digital transformation already underway.


Steve Zisk 2022 Scaled

John Nash

Chief Marketing & Strategy Officer at Redpoint Global

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