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Personalization in Banking: The Consumer Perspective

Aaron Brennan | November 5, 2018

Consumers demand personalized experiences from their banks. The personalization engines pioneered by the likes of Amazon and other e-commerce brands to deliver contextually relevant experiences in the precise moment of need have created heightened expectations in virtually every facet of our connected lives. And consumers are going to handsomely reward the institutions that answer the challenge. Boston Consulting Group research from 2017 predicts that in a five-year span, just 15 percent of brands in retail, financial services, and healthcare will gain $800 billion in revenue due to superior personalization.

This is a pivotal moment for traditional banks to make improvements. Understanding consumer expectations is the first step. The Capgemini/Efma World Retail Banking Report 2017 finds that 49.5 percent of consumers report positive experiences with retail banks, while 57.8 percent of consumers report positive experiences with non-traditional financial institutions. When you see the situation through the eyes of consumers, it’s easy to spot opportunities for improvement.

Consumers In Charge

Banks need to understand that a crucial step in personalization is letting their customers drive the omnichannel interaction, instead of forcing them into traditional channel silos. Today, every account holder is free to build his or her own blend of channel interactions. Offering redundant features, such as bill payment through both a website portal and mobile app, gives consumers feelings of control and flexibility over the banking experience. Banks are well-positioned already to collect and to analyze a great deal of information about customers and their engagement channels. Understanding these channel preferences should be part of a broader effort to clean up consumer data and use those insights to respond to the needs of consumers in a way that feels natural and spontaneous, not like a preprogrammed step in a scripted campaign.

PwC’s 2018 Digital Banking Consumer Survey found that 46 percent of banking customers are now digital only. With the widespread adoption of direct deposit and mobile check deposit, international ATM networks, and a variety of cashless payment options consumers can go months or even years without starting a conversation with a bank employee. That’s significant because when one of these digital-first consumers does raise their hand to start a conversation, banks must be ready both to listen and to respond. The digital-first consumer is more likely than ever to know what they need and want to bank with an institution that can quickly pivot to meet their needs.

New Frontiers For Banking and Personalization

Mobile tech and omnichannel recommendations are just the beginning. Consumer adoption of voice interfaces and intelligent agents is on the rise. Just as they expected banks to keep up with them on Internet and smartphones, consumers will soon demand the same seamless quality of service from these cutting-edge channels. Every new type of customer experience can shape how their expectations of personalization change. It is less about the mode of delivery of the communication and more about the value add that the communication brings to the consumer.

Examples of core elements of success in personalization are:

  • Radical pricing transparency, like Progressive Insurance provides its customers. By being clear not only about its own prices but also those of its competitors, Progressive establishes trust and shows that it will make good use of personal information by using it to help consumers make faster decisions.
  • Adopting a golden customer record that incorporates purchase data, preferences, and other behavioral information from multiple engagement systems and data sources into a single, 360-degree view. These matched identifiers help transform interactions by significantly cutting down on generic or misguided messages and letting banks send more competitive offers to the right customers.
  • Improving omnichannel engagement, which in retail raises lifetime value by 30 percent.

Financial institutions will have to tackle questions of security and authentication as they reinvent the natural language banking experience. Fortunately, traditional banks have a lot of credibility and experience in this area, as face-to-face conversations are what the business was built on.

In a follow up post, my colleague Steve Zisk will talk about how banks can tackle these overlapping challenges, adjust and refine their omnichannel messages and learn to become better listeners.

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Aaron Brennan
Aaron Brennan

Aaron Brennan is a senior product marketing manager for RedPoint Global.