Household debt, mortgage balances and auto loans are all rising to all-time highs, according to data from the Federal Reserve Bank of New York. For banks and financial services institutions, rising consumer debt makes it more important than ever to know all there is to know about an existing customer, especially when the goal is to maximize cross-sell and upsell opportunities. To mitigate risk, it is advantageous to know which financial product is the best fit for each customer or household. For whom should a bank extend an offer to a premium credit card, for instance, that might allow customers to carry higher balances?
A challenge for many banks to mitigate risk and make the right offer to the right customer is that data and processes tend to be siloed. Various lines of business – mortgage, insurance, auto, retirement – typically have no insight into a customer beyond the product portfolio. If the goal is to bundle homeowner’s insurance with a mortgage, as one example, it benefits the company to know everything there is to know about a customer beyond what’s on the mortgage documents. Is the credit score updated? What is the customer’s life stage? Previous policy history?
The Power of a Golden Record
Maximizing cross-sell and upsell opportunities in financial services is one use case for data readiness. An enterprise data readiness hub aggregates and unifies customer data from all potential sources, builds a Golden Record and segments and activates audiences to various end channels for the purpose of delivering personalized experiences. For banks and financial institutions, data readiness is important for analyzing customer data and interactions, as well as increasing conversion rates and customer lifetime value (CLV) by making the right offer to the right customer at the right time and on the right channel.
A primary objective of a data readiness hub is to build a Golden Record, a real time, unified customer profile that combines a complete identity graph with a customer’s contact graph as well as transactional history, data aggregates and data attributes. When a Golden Record is made available to users across an organization, everyone has the same updated view of a customer. With the use of persistent key, a Golden Record also provides a contextual view of a customer over time. What that means is that everyone who has access to the Golden Record knows everything there is to know about a customer, including all interactions across the organization. And because a Golden Record is built using advanced identity resolution capabilities, including both deterministic and probabilistic matching, the contextual customer understanding extends to household relationships, a vital consideration for a bank.
Using a Golden Record, a financial institution can make knowledgeable, informed cross-sell and upsell offers because it knows the customer’s complete history with the company – the product portfolio, usage, and interactions across every line of business. It also knows how to package the offer, i.e., what channel or sequence of channels to use to make the offer, the cadence of the outreach, etc. A customer-facing application using GenAI capabilities might even leverage the Golden Record to alter the tone of the outreach, such as changing the text or speech in a chatbot to align with a customer’s dialect.
Dynamic Segmentation for the Win
Dynamic segmentation refers to the ability to divide audiences in real time in the cadence of an ongoing customer journey. This means that if a customer is eligible for a certain upsell offer based on a recent behavior, but then becomes ineligible based on the next behavior, the customer is automatically moved out of the audience segment for that particular offer. Conversely, what is more common is for financial institutions to build segments off lists of customers, with a list beginning to decay the moment it’s created. Lists become less and less effective as customers have more options for engaging with a financial institution, such as 24/7 online banking. Even a routine browsing session provides a wealth of new data – the products a customer researches, the page visits, etc. Just a single browsing session might materially impact what cross-sell or upsell offer a bank makes – and that the customer is eligible for. When segments are built using rules and based off a real time Golden Record, a segment will always reflect the precise context and cadence of a customer’s banking journey. And when a segment is activated at the last possible moment, an organization can trust that the ensuing interaction is relevant for the customer.
A hyper-relevant, personalized banking experience increases cross-sell and upsell conversions because the offers are made with confidence. The brand knows the customer is interested in the product. It knows the customer is low risk. It knows the customer wants to retire at 65. It has, in short, every data point it needs to make an educated, informed decision about what type of offer will maximize revenue, increase lifetime value, or achieve whatever metric the institution is after. The institution also builds customer loyalty because it treats the customer as a unique individual, interested not only in a transaction but in helping to guide the customer through a personalized journey. According to a recent study from Dynamic Yield, 72 percent of banking consumers said that products that are tailored to their individual needs are more valuable. In the same study, more than 85 percent of financial institutions say that having a personalization strategy is a priority, and 92 percent plan to invest further resources in executing a personalization strategy.
For information on how the Redpoint Data Readiness Hub helps financial institutions unlock the power of their customer data, click here.
