In banking, personalising digital banking services is slowly becoming a means for survival. Most banks, however, still don’t know how to even start making use of customer data to achieve this. Let’s see some examples of how personalisation can unlock new revenue streams and improve customer experience.

The benefits of personalisation are hard to deny. About half (49%) of customers claiming a positive experience with their bank said that they had been offered personalised services, accordingto the new World Retail Banking Report 2018 published by Capgemini and Efma. A wind of change finally seems to be blowing through the financial sector, where players, incumbents in particular, have been way too slow to recognise the importance of personalisation in digital transformation and bettering customer relationships in the digital age.

To show just how crucial individual attention has become to banking customers in general, the positive experience rate cited in the report dropped to 39.5% when it came to customers who said their bank did not proactively offer them personalised services. And for Gen Y customers, the difference in positive experience with proactive and non-proactive institutions was as high as 14.8%, indicating that younger clients expect even more attention from their banks.  

Digital-only players, fintechs and big technology companies, like Amazon or Facebook, have significantly raised the bar in customer expectations, and if banks fail to understand and quickly respond to new playground rules, they risk losing clients who are ready to move on to new service providers, Capgemini and Efma found. Ongoing investment in the proactive delivery of personalised products and services can be a good solution for banks to build and keep trust and loyalty.

Some of them are already well aware of this: “We proactively keep in touch with the customer, and not just from transaction to transaction, but through a relationship that could be described under the permissioned marketing concept. Personalization is a natural part of this process reflecting also in the right mix of channels for each individual,” an executive at Croatia’s Privredna banka Zagreb explained in the report.

Showing a good example

Being able to predict the future needs of customers and offering relevant personalised banking services (or even third-party offers from merchants and other partners) is key to success. Several institutions are in the middle of developing or have already rolled out tailored offerings to get ahead of the game:

  • Bank of Ireland has startedmerging online and offline data to boost customer engagement. They took a leaf out of tech giants’ book, and started using tagging and tracking tools to personalise e-mail messages and omnichannel branch experiences. Their efforts certainly seem to have paid off: there has been a 278% bump in application submissions across digital channels. Plus displaying personalised content has helped the bank raise personal loan digital application submissions by 15%.
  • Capital One in the US has been working together with analytics platform Foursquare to develop a solution that uses location-based customer data to send out real-time mobile banking app notifications to clients who shop at partner retailers. Capital One has beenreportedly beta-testing location-based offers for more than a year, with the ultimate goal of driving up adoption of its cards at selected retailers and in selected purchase categories.
  • Bank Zachodni WBK in Poland hasused its Neo Intelligence project to learn more about its customers by analysing their social networks and observing their online community activity. They’ve assigned social roles, such as a leader or a follower, to bank customers to grasp their motivations and target them with relevant offers and services. The project both supports customer acquisition and helps strengthen the bank’s relationship with the most valuable customers. The effectiveness of the campaign increased 15-fold compared with a previous edition, while total responses have doubled.
  • London-based banking giant HSBChas been using artificial intelligence (AI) to give US credit card customers a personalised shopping experience. They’re in the process of creating a rewards program that processes customer data to predict how clients may redeem their credit card points, so they can market offerings, including travel, merchandise, gift cards and cash more actively. The technology recommends a redemption category to promote to each credit card holder. HSBC sent out emails based on these recommendations earlier this year and also emailed a random category to a control group. About 70% hopped on rewards in the AI-recommended category while the number of opened emails rose by 40%.

Using data like big techs? Not just yet

Companies like Google, Amazon, Facebook and Apple (GAFA) are quickly expanding their customer base by effectively leveraging customer data to offer a more personalised and seamless experience. Banks have been slowly following suit and investing in beefing up data utilisation capabilities. But despite of promising initial results, executives believe most financial institutions continue lagging behind big tech giants.

“I don’t think banks are nowhere near where GAFA firms are toward the utilization of data, and banks are making baby steps in this area,” the head of group strategy at Israel Discount Bank said in the latest World Retail Banking Report. Another executive at Nedbank, expects technology, such as AI and machine learning, to assist banks with catching up with GAFA companies in leveraging data.

Making good use of data analytics can indeed help financial institutions get a full picture of what customers need, and develop personalised products and services accordingly, Capgemini and Efma concluded in their report. They also agreed though that customised products should take into account the various lifestyle and life stage needs of clients. Real-time analytics can also help cut drop-out rates, determine optimal pricing and come up with the best offers to impress customers.

Banks have been upgrading their systems to focus on customers, but the big question is if they can figure out what customers really need and how to use the wealth of knowledge they already have to understand customer expectations in the future,Balázs Vinnai, W.UP’s new president and investor, said recently. As he put it, banking is no longer about products, like credit cards or mortgages, but more about mapping out the individual needs of each banking customer.


Segments of one: Customer insights in digital banking

Segments of one: Customer insights in digital banking

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