Customers used to compare banks to each other. Now they compare them to Amazon. As a result, personalised services, superb digital experiences, and relevant and timely offers are just some of the things they expect from financial service providers. And if traditional players want to fend off profit-hungry challengers, including digital-only banks and technology giants, they had better deliver.
Of course, that’s easier said than done. Old-school methods for targeting customers, boosting engagement and increasing sales simply no longer work as well as they used to. The reason? Banking is not about offering products, such as credit cards or mortgages, anymore. It’s about understanding and cater to individual needs.
But there’s good news, too. Luckily, incumbents actually have all the tools they need to step up their game. Data tools, including artificial intelligence-powered solutions from algorithms to advanced analytics, allow them to create big-hitting marketing and sales campaigns using data-driven customer insights.
What do these insights do exactly? In a nutshell, they offer actionable information about customers that trigger effective marketing actions, such as providing financial advice and coming up with tailored product offers. In other words, they can help you predict what products or services your customers are likely to buy.
And just how effective are these insights, you may wonder. Here are some numbers to give you an idea: conversion rates can increase by 2.14-2.4 percentage points on average while transaction numbers can double for banking products like overdrafts, credit cards and personal loans.
Teaming up with third-party software providers can help banks tap the benefits of pre-configured customer insights, or to configure insight templates and associated campaigns or widgets to their own liking. That way they can serve a range of different purposes, resulting in hundreds of use cases.
In our upcoming series, we’re taking a closer look at how to make the most of customer insights. First, let’s see some use cases for using customer insights to provide meaningful advice to customers without pushing products directly and how to channel customers right into the sales process.
Customer advice: no product-pushing
Many banks focus their personalisation efforts on sales. But offering tailored advice and relevant information to customers is just as essential to boost engagement, build trust and develop stronger customer relationships. These messages are sent daily or even several times a day, as opposed to the occasional sales communication, and “form the crux of the customer’s banking experience”.
Surveys show that more than half (58%) of retail customers who receive advice from their banks actually act on it. In many cases, providing customer advice can indirectly lead to sales: 86% of retail customers who are highly satisfied with the suggestions they receive from their bank say that they would buy more products from them and 44% have already opened a new account based on the advice they received.
Suggestions or tips from banks that customers may not expect, such as travel information based on their current location, insights into their spending habits or forecasts about their budgets for the coming days, are a great way to increase customer satisfaction. These interactions can be prompted by data-driven insights and can come in any form, including alerts, insights and more complex reports.
Thinking ahead: alerts on upcoming due dates and events
Let’s see a couple of use cases that involve providing advice on current and future events related to the customers’ existing banking products and services or reminding them of important due dates coming up.
Remember your upcoming payment – Based on transactional information, banks can detect if the due date for a payment transaction is approaching and alert the customer several days in advance. Separate insights can be set up for different types of due payments, such as loan instalments, credit card repayments and utility bill payments.
Your direct debit will expire soon – This insight works similarly to the previous one, letting banks notify customers about the upcoming expiry date of their direct debits based on core system data. In a related use case, banks can suggest increasing direct debit limits, should the amount of the latest utility bill exceed the average recorded over the previous billing period.
Travelling somewhere? – Customers certainly appreciate advice on exchange rates, setting card and ATM limits, or even traffic and weather info when going on a trip abroad. Banks can detect if customers are at the airport or at their destinations based on geolocation data from mobile devices and the first transactions registered abroad. These alerts can also be combined with direct sales offers.
Spending habits and balances: empower your customers
Updates on trends and changes in their spending habits, or balance forecasts can be extremely useful to all customers, even if they’re using personal finance management (PFM) tools.
Check your spending report – Using aggregate values of transactions and purchases over the previous week or month, banks can come up with digest reports about customers’ spending behaviour. Showing customers how their overall spending changes is a core element of any money management service from banks.
Check your smart balance – The smart balance tool forecasts the customer’s account balance for the next few days, drawing on expected upcoming expenses and income. It’s a service insight by default but can be used as a sales insight if low balance is detected, allowing banks to propose an overdraft or transferring funds from a separate account.
Where does your money go? – Providing more specific information to customers about their spending habits helps them monitor and manage their finances better. Using transaction history, this insight allows banks to highlight top spending categories and rank them based on the value of past purchases.
If you are interested to read more use cases, download our free ebook “44 use cases for banks to boost engagement and improve digital offers with data-driven customer insights”.